At the time of FTX’s collapse, about 950 users in Taiwan had a total of $150 million worth of digital assets stored or held at the crypto exchange, a law firm has reportedly said. FTX users in Taiwan were reportedly investing in interest-bearing digital assets using cheap funds borrowed from local banks.
FTX’s Popularity With Taiwanese Users
According to a Taiwanese law firm, Enlighten Law Group, about 950 people in the country had digital assets worth $150 million stored on the crypto exchange FTX when it collapsed. The law firm also revealed that four unnamed individuals had incurred losses exceeding $5 million each.
As stated in a report by Wublockchain, the number of FTX victims in Taiwan is over 30 times more than those that have come forward in China. The report also stated that only one Chinese user suffered losses that exceed $5 million.
Explaining the reasons which seemingly attract Taiwanese users to less regulated crypto exchange platforms like FTX, the law firm pointed to the collapsed crypto exchange’s effective use of local partners and ambassadors. The ease with which Taiwanese users got access to funds, as well as the fact that FTX was owned by a non-Chinese citizen, were also identified by the law firm as the key factors.
Taking Advantage of Taiwan’s Low Interest Rates
However, according to Enlighten Law Group, the crypto exchange’s offer of an interest rate of 8% on interest-bearing products may be one of the main reasons why Taiwanese users flocked to the Bahamas-registered crypto exchange.
“In Taiwan, bank deposits interest rate is almost zero, and mortgage, credit loans interest only needs to be around 3%,” the report quotes the firm explaining. According to the law firm, some users had been exploiting this arbitrage gap by “borrowing from banks and re-depositing into FTX.”
As the chances of an intervention by Taiwanese authorities are said to be slim, the law firm urged users from the country to seek redress in the United States, where a judicial process is now reportedly underway.
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