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25% to 40% of Crypto Funds Were Exposed to FTX, Says Crypto Fund Research

Cointime Staff· 2 min read

Crypto funds affected by the FTX collapse have, on average, 7% to 12% of AUM locked on the exchange.

The FTX collapse will go down as one of the heaviest blows to the cryptocurrency industry. Besides users losing their deposits to the exchange, Crypto Fund Research also reveals that a considerable number of crypto funds have some portion of their assets locked on FTX, which began bankruptcy proceedings last Friday.

Losses by Crypto Funds Could Reach $5 Billion

According to Crypto Fund Research, between 25% and 40% of crypto hedge funds and venture capital funds were exposed to either FTX or its cryptocurrency FTT, which is currently down by more than 90%. Josh Gnaizda, CEO of the data platform, said an average of 7% to 12% of assets managed by the entities were likely affected.

Gnaizda predicts that the contagion could directly or indirectly hit more funds and that the losses to reach as high as $5 billion.

“When the smoke clears, we expect the losses from crypto hedge funds and crypto venture funds directly exposed to the FTX collapse to have associated losses of well over $1 billion and possibly as much as $5 billion,” Gnaizda said.

Paradigm, Coinbase, Galaxy Digital Incur Losses Amid FTX Debacle

Paradigm is one such cryptocurrency investment fund reportedly exposed to the bankrupt exchange. The fund invested $290 million in a group of companies led by Sam Bankman-Fried, the founder of FTX. According to reports, Sequoia and Temasek also lost about $418 million in investment to the crypto exchange.

Other investment firms like Galois Capital and Selini Capital, including Coinbase and Galaxy Digital, have funds trapped on FTX.

FTX commenced its voluntary bankruptcy proceeding on November 11th, covering about 130 companies, including FTX.US. The company’s assets range between $9 billion to $10 billion, of which only about $900 million are reportedly liquid. Most of the assets the exchange declared were semi-liquid and illiquid, meaning they could not be easily sold or redeemed.


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