Zug-based startup Oxygen wanted to merge investment banking and crypto. The firm could count on millions from FTX founder Sam Bankman-Fried. Now it has issued a distress call.
Yesterday, Oxygen, a crypto firm based in Zug's «Crypto Valley» issued the sobering statement that ninety-five percent, virtually all, of the Oxy and MAPS tokens in the company's proprietary ecosystem were on the FTX platform.
The Bahamas-based crypto exchange's crash in recent days left more than 1 million debtors out in the cold. Compounding the problems is a sprawling web of companies and holdings some of which, such as FTX Europe, are based in Switzerland. Even professionals are still unraveling the consequences of the fall of the trading platform.
From Mocking to Spiteful
Needless to say, the Oxygen team is in a state of shock over the events, with the company stating that «we are considering all options on how to protect the MAPS & Oxy ecosystems and have retained legal advisors to assist with this ongoing process.»
The Oxy token has lost nearly 100 percent of its value and is currently trading at virtually zero. The same is true for MAPS securities. Accordingly, social media is teeming with mocking to spiteful comments. A finews.ch inquiry to the startup asking for comment has so far gone unanswered.
Alameda Research Capital Injection
The company founded in Zug in mid-2020 appears to be a letterbox company with multiple board members on the supervisory board. It is linked to FTX subsidiary Alameda Research which gambled with FTX's customer deposits and contributed significantly to the stock exchange's demise.
In early 2021, Alameda led a capital round that injected about $40 million into Oxygen's coffers. The goal had been to build a prime brokerage for the crypto scene, providing services for investors looking to make investments in companies, tokens, and coins.
Credit Suisse recently withdrew from precisely this field of investment banking after suffering a loss of 4.4 billion francs resulting from the bankruptcy of the New York financial firm Archegos.
Seeking Customers Among App Users
Oxygen planned to tap users of the geolocation app Maps.me as lenders to fund loans to prime brokerage users. Alameda Research previously invested in Maps.me. The Google Maps-like app has more than 100 million users. Oxygen's platform, in turn, is based on Solana. This is a competitor blockchain to Ethereum, which is also domiciled in Zug.
Now, Solana tokens are under massive pressure because of their close ties to FTX.
12 Percent Return
At the time, the industry portal «Coindesk» quoted FTX founder Sam Bankman-Fried on the benefits of his Zug investment.
«So all you need to show [users] of Maps.me is that if they want to lend out some dollars, they can get 12% per year. But behind it, there’s a full prime brokerage model on-chain that's capable of powering borrowing, lending, derivatives, structured products, portfolio margin, and a lot of other things.»
In crypto boom times, investors probably found this an enticing prospect. But in light of the age-old adage of «if it sounds too good to be true, it probably isn't,» his comment sounds like it should have been a warning. In any case, the omens have thoroughly turned bad. Due to the insolvency of Alameda Research, it can be assumed that the company's investments are also worthless.
The statement from Oxygen went on to say «this is a dynamic situation that impacts the entire crypto ecosystem. We will communicate the next steps as soon as we have a meaningful update.»
Contributors: by Samuel Gerber and Thomas Pentsy
