Last week, the crypto world was rocked by the stunning collapse of FTX, the second largest cryptocurrency exchange. While the ripple effect in the industry is still being felt, Coachella appears to be facing collateral damage.
The festival partnered with FTX.US to sell $1.5 million worth of NFTs back in February, a couple of months before the event’s first production in Southern California after the pandemic. The collection included 10 “Coachella Keys” NFTs that gave lifetime access to the festival and VIP perks such as luxury experiences and exclusive merchandise. Many of these NFTs now appear to be stuck and unavailable on a defunct exchange.
“Like many of you, we have been following this news unfolding online over the past few days and have been shocked by the outcome,” a Coachella employee said on the festival’s Discord server. “Currently we do not have any lines of communication with the FTX team. We have put together an in-house team to develop solutions based on the tools we have access to. Our priority is to remove Coachella NFT from FTX, which is currently disabled.”
“We are actively working on solutions and we are confident that we can protect the interests of Coachella’s NFT holders,” said Coachella’s head of innovation. Sam Schoonover in a statement sent Billboard.
FTX filed for Chapter 11 bankruptcy on Friday, citing a “serious liquidity crunch” after savers rushed to withdraw more than $6 billion in 72 hours. It is claimed that FTX and its founder Sam Bankman-Fried pooled client deposits with its subsidiary trading firm Alameda Research, resulting in a multi-billion dollar hole in the exchange’s balance sheet. As clients rushed to withdraw their funds, it became clear that FTX was insolvent.
The consequences of the dominoes were disastrous: billions of dollars were blocked, and there was little chance of recovery. Among these assets are several NFTs issued through the FTX platform, including NFTs from Coachella and Tomorrowland.
One collector said Billboard he was able to withdraw his Coachella key to his wallet just a few days before FTX went bankrupt, but many others weren’t so lucky. Anyone who has stored their NFTs on the FTX platform does not currently have access to them.
While few in the Web3 industry predicted a crisis of this magnitude, many cryptocurrency advocates have long argued that NFTs and cryptocurrencies should not be stored or stored on centralized platforms like FTX. The latest update from the Coachella team, released on Saturday (November 12), advised users not to interact with any FTX product and to log out of all FTX accounts.