A roundup of crypto exchanges in the aftermath of the FTX crash
Following FTX’s collapse, several crypto exchanges followed suit, while many others still stand tall. Here’s a situation report of crypto exchanges in recent times.
Which crypto exchanges will survive in the post-FTX era?
The rising awareness about cryptocurrencies and their advantages has recently driven massive growth in the industry. The global crypto space has witnessed the launch of several new exchanges and significant developments with existing ones.
However, the crypto industry has also seen major drawbacks lately. In addition to several hacks and price drops, the crypto space has gone down about $100 million, as per a recent market analysis, resulting from the failure of major crypto exchanges around the globe. The largest crypto exchange failure of the year 2022 and the propeller of several other crashes is the FTX crisis.
Following the collapse of FTX, bitcoin has plummeted from $20k a coin to $16.5k, its lowest value since 2020. The wider sector has also fallen almost 5%, according to CoinMarketCap. Consequently, big companies and protocols exposed to FTX face major liquidity problems.
This roundup report will provide you with an overview of the current situation of major crypto exchanges around the globe.
Exchanges affected by the FTX contagion
Although the FTX collapse severely affected the broader crypto market, some companies bore more of the brunt of the impact than others. About thirteen exchanges filed for bankruptcy alongside FTX. Coin telegraph tracked other affected companies, including Genesis Institutional trading firm, Galaxy, Sequoia Capital, Galois Capital, BlockFi, Crypto.com, Wintermute, Multicoin Capital, Coinshares, Amber Group, Pantera Capital, and Nexo.
BlockFi
A few weeks after the collapse of FTX, BlockFi, a cryptocurrency lender that targeted ordinary investors eager for a piece of crypt mania, filed for bankruptcy on November 28, felled by its financial ties to FTX. BlockFi filed for chapter 11 protection in New Jersey following several other exchanges. The firm had earlier struck a deal with FTX to stabilize itself after its rival Celsius network crash in July. FTX loaned BlockFi a sum of $400 million and, subsequently, $275 million from its subsidiary. Due to the financial entanglement, when FTX filed for bankruptcy, BlockFi also began to struggle.
Nexo
Following its involvement with Crypto lender, three investors are suing Nexo in the London High Court, alleging that the firm blocked them from withdrawing over £107 million ($126 million) worth of crypto. The report stated that the company “intimidated” the trio into selling their crypto back to the company at a 60% discount to buffer the impact of the FTX fall.
Genesis Global Capital
On November 11, Genesis announced that it had $175 million in locked funds within the firm’s trading account on FTX. However, the company noted that this does not impact its market-making activities. Galaxy Digital has also recently disclosed its $76.8 million exposure to FTX. The firm highlighted that $47.5 million is already being withdrawn within the amount.
Genesis Global Capital, which had $2.8 billion in active loans at the end of September, blamed the collapse of the crypto exchange FTX for temporarily suspending its services. Genesis tweeted on Nov.9 that it “hedged and sold collateral resulting in a total loss of $7M across all counterparties, including Alameda.”
Multicoin Capital
Crypto-focused venture capital firm Multicoin Capital has around 10% of the total assets under management of its Master Fund stuck as pending withdrawals on FTX, according to a letter from the firm viewed by The Block. However, Multicoin was able to move about 24% of its FTX-held assets before the withdrawal freeze went into effect on Tuesday, November 8, 2022. The stuck assets include Bitcoin (BTC), ether (ETH), and USD.
Furthermore, Sequoia Capital announced that its $213.5 million investment in companies FTX and FTX US is now worth $0. The firm admitted that the FTX debacle spurred a solvency risk. Despite this, the venture capital firm claimed that its exposure is limited and offset by its gains. Galois Capital Hedge fund Galois Capital has also admitted that part of its funds is stuck on FTX.
In a letter to investors obtained by the Financial Times, the firm reportedly has half of its capital stuck on FTX. As the FTX collapse hit the market, crypto lending firm BlockFi has also admitted having “significant exposure to FTX and associated corporate entities.” Similarly, Kris Marszalek, CEO of exchange Crypto.com, recently assured his customers that the $ 1 billion worth of assets that the exchange moved to FTX was fully recovered.
Despite all these, FTX Japan, an FTX subsidiary, plans to resume customer withdrawals by the end of the year, according to NHK. It cannot do so right away as it uses the same suspended payment system as its parent company, said the report, citing an unnamed executive. The subsidiary is now developing its own system to allow customers to withdraw assets.
Recent crypto exchange wins
Despite the poor climate, crypto exchanges are still marking great feats. There have been several crypto expansions and newer project launches in recent times.
Binance enters Japan’s crypto markets with the acquisition of Sakura
Regardless of its involvement with FTX, Binance continues to expand its reach. The leading crypto firm has bought Sakura Exchange BitCoin (SEBC), a Japanese crypto exchange regulated by the country’s Financial Services Agency (FSA), for an undisclosed sum, according to a recent blog post.
With the acquisition, Binance, the world’s largest crypto exchange by trading volume, has entered the Japanese market, adding it to the now substantial list of countries with some regulatory authorization.
Also, recently, Binance received authorization as a crypto asset service provider in Cyprus, having previously won similar licenses in France, Italy, Spain, Bahrain, Abu Dhabi, Dubai, and Kazakhstan.
Crypto exchanges Nexo and Gemini expansions in Italy
Crypto service providers Nexo and Gemini have also been approved for registration with an Italian regulator, allowing the platforms to serve customers in the country. Crypto exchanges like Binance, Coinbase, and Coinify have also been approved for registration.
Conclusion
The past few weeks have been indeed difficult for crypto exchanges. The FTX crisis has shaken the crypto world like never before. However, while several crypto exchanges have been put out of business, this is not the end of the crypto business, as many others are still thriving amidst all. We have seen and will continue to see groundbreaking crypto innovations in the time to come as we look forward to the restoration of the crypto world.
