Floating Point up against wall following $20M hack

Beset by an eight-figure hack, the operations of institutional crypto prime brokerage Floating Point Group (FPG) were on the brink on Friday, according to two sources familiar with the matter. 

In the near-immediate aftermath of the hack, which resulted in the loss of a preliminary estimated $15 million to $20 million in cryptocurrencies, FPG moved to shutter its trading activities, the company said via Twitter on June 14.

Both sources claimed that around that same time, the US-based FPG parted ways with a significant number of staffers — a move evidently designed to buffer the firm’s balance sheet as the business dealt with a standing loss of the entity’s core trading revenues.

Those layoffs mounted to a figure encompassing virtually all of FPG, apart from the company’s core team, including its founding members, both sources said. One source said as much as 90% of staffers were let go.

Both sources, who were granted anonymity to discuss sensitive business dealings, said the expectation among FPG’s counterparties is that it would close down. But an unwinding could also take the form of an acquisition, or an outright purchase, of some or all of FPG’s apparently distressed assets, extending to the company’s tech stack.

Asked whether FPG was shutting down, John Peurifoy, the startup’s chief executive and co-founder, told Blockworks on Friday that “we don’t know yet, genuinely.”

Nine in 10 staffers let go was too high of a figure, according to Peurifoy, who said the “majority” of employees were no longer with the company, but declined to specify exact numbers. 

Several staffers who survived an initial round of cuts following the June exploit were let go a couple of weeks later, one source said. One possible explanation is that FPG was keeping them on the payroll in a bid to drum up any interest in a round of emergency financing to get the business back on track — or to entice a possible purchaser.

FPG executives have been speaking to a number of potential outside investors since the incident, though there is no indication those talks have amounted to much. 

Complicating any kind of outside deal is the fact that FPG’s hack had yet to be resolved, at least publicly. Its perpetrators were not identified, with FPG referring to the breach as a “cyber security incident.” 

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The company said it had alerted law enforcement to the breach when it became aware of it, going on to work with “the FBI, the Department of Homeland Security, our regulators, and Chainalysis to understand how this occurred and to recover assets.”

On its website, FPG touted its trading customers, including crypto hedge funds, as having more than $50 billion in assets. It listed its DeFi vault, which routed customer assets to a range of trading platforms, including Maker, Lido and Uniswap.

Declining to comment on the ongoing investigation or the prospects of raising additional capital, Peurifoy said the company is “in a holding period right now.”

“I genuinely don’t know what the future of the organization is and what we want to do with it…we effectively, right now, are leaving avenues open,” he said. “We’re still having conversations with people…going through a lot of discussions, exploring several different routes.”

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