Unraveling the Cryptocurrency Market Post-FTX: The Steaker Saga and Compensation Plan

The fast-paced realm of cryptocurrency often encounters challenges that extend beyond technological hurdles. Wilson Huang, a key player in Taiwan’s blockchain and cryptocurrency landscape and the founder and CEO of Steaker, found himself navigating uncharted waters as FTX, the world’s second-largest cryptocurrency exchange, filed for bankruptcy. Little did he anticipate that the true test for this burgeoning financial industry wouldn’t be technological but rather the legal risks it entailed.

Unraveling the Cryptocurrency Market Post-FTX: The Steaker Saga and Compensation Plan

The FTX Bankruptcy Shockwave

As FTX grappled with an $8 billion funding gap, Huang’s realization of the impending crisis was swift. Steaker, managing assets worth $10 million on FTX, had to adjust its strategy. The ensuing impact on investors prompted a collective response, with over a thousand affected users forming a group, some opting to pursue legal action against Huang for alleged fraud.

Read more: FTX’s Ex-CEO Sam Bankman-Fried’s Legal Battle

Steaker’s Response and the Dawn Compensation Plan

In light of FTX’s bankruptcy fallout, Steaker proactively implemented a strategic trading approach using its $10 million in assets. However, the challenges faced by investors unable to withdraw funds led to the creation of the “Steaker Compensation Plan.” This initiative aimed to address concerns expressed by investors like Xiao Wei, who lamented, “Since my investment in the Steaker project has a term of three or six months, early redemption is not an option.”

Steaker's Response and the Dawn Compensation Plan

Legal Ramifications and Industry-Wide Scrutiny

The arrest of Wilson Huang and legal actions against Steaker heightened the industry’s awareness of evolving regulatory dynamics in Taiwan. Insiders speculated that this could mark the first instance of a digital asset management company facing charges under the Banking Act. The traditional belief that cryptocurrency operations remained within regulatory bounds as long as fiat currency wasn’t involved faced reconsideration.

Post-FTX Era: Stricter Regulations Take Shape

In early 2022, following the collapse of various cryptocurrency platforms, Taiwan’s government established a cross-agency working group to discuss the regulation of this volatile industry. FSC Chairman Huang Tianwu emphasized the gradual regulation of cryptocurrency as a high-risk investment to protect investors. The central bank aligned with the proposed international regulatory framework for cryptocurrency activities released by the Financial Stability Board (FSB) in the preceding year.

Cryptocurrency Companies Face Compliance Challenges

The aftermath of FTX’s collapse and the Steaker incident raised concerns among cryptocurrency startups in Taiwan. Compliance with anti-money laundering (AML) regulations became a burden for small companies, with significant costs associated with customer due diligence requirements and transaction monitoring tools like Chainalysis and CipherTrace.

Reno Du, founder of Hooky Finance, revealed the financial strain on startups aiming to comply with AML regulations. Du lamented,

“Starting a business used to involve hiring engineers with an annual cost of NT$10 million. Now you need an additional NT$10 million for legal compliance; it’s becoming too challenging.” Some companies decided to exit the market, adjusting their business models to cater only to institutional investors due to legal restrictions.

The Steaker Extension

Amidst the legal challenges and industry-wide scrutiny, the Steaker saga continues. Steaker’s innovative response to the FTX fallout has been marked by the implementation of the Dawn Compensation Plan. Over 70% of affected users actively participated in this plan, receiving compensation in phases. Simultaneously, Steaker pursued a claim against FTX, signaling a commitment to seeking asset compensation for its users.

Conclusion

The FTX-induced crisis has cast a shadow over Taiwan’s dynamic cryptocurrency industry, prompting regulatory scrutiny and forcing businesses to adapt to stricter compliance measures. Steaker’s ongoing efforts, including the Dawn Compensation Plan, reflect a commitment to addressing user concerns amid these challenging times. As the cryptocurrency landscape evolves, businesses must remain vigilant, ensuring legal compliance while exploring innovative applications of blockchain technology. The Steaker extension adds an intriguing chapter to the unfolding narrative of the post-FTX cryptocurrency market.

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