By George Ward
The spillover of the FTX collapse has reached one of Europe’s leading digital asset investment platforms, CoinShares, with the firm revealing that roughly 11% of its net value is held in the troubled company.
Meanwhile, CoinShares is one of many platforms impacted by the recent liquidity issue. Galaxy Digital has over $76 million worth of crypto assets on FTX.
CoinShares noted in a recent interview with Bloomberg that close to $26 million of its exposure to FTX involves USDT and USDC stablecoins. In addition, it also has 190 BTC and 1,000 ETH pending withdrawals from FTX, which accounts for more than $4 million of the remaining assets stuck with the embattled crypto exchange.
Jean-Marie Mognetti, CoinShares’ CEO, stated that the assets were part of the capital market shares and mainly for proprietary trading activities. However, Mognetti added that the potential losses have no immediate impact on CoinShares’ exchange-traded funds (ETF).
The firm has no relationship with Alameda Research, FTX’s sister company. The problems of the Sam Bankman-Fried empire began a few days ago when Binance announced its decision to liquidate its FTT tokens, which are the native coins of FTX.
In reaction, the token’s value plummets, with investors making a move to withdraw all their funds. However, FTX initially restricted withdrawals as Bankman-Fried sought emergency funds from venture capital. As a result, the FTT coin has lost more than 90% of its value following the latest event.
FTX Founder Downplays Crisis
Following traders’ panic and fears about a Terra-like collapse, FTX’s CEO, Sam Bankman-Fried, assured the community that all is well with FTX and their funds. However, the decision to pause operations and halt withdrawal further worsened as more investors expressed concerns over a looming collapse.
Shortly after, the FTX boss disclosed that Binance is set to stabilize the firm by acquiring its non-US firms. But things worsened as Binance backed out of the deal, saying it was a non-binding agreement.
Its CEO, Changpeng Zhao, revealed that “it was beyond our control.” Commenting on the failed deal, the CEO of CoinShares noted that such deals between crypto exchanges might appear easy for market participants, but there is a risk involved.
The CEO stated:
“Investors perceived FTX’s operation as a quasi-bank, which is not the case. People can trade crypto assets on exchanges, but everyone knows several risks associated with their investments may not be in their favor.”
Thus, the Coinshares CEO explains that there is a risk to any crypto asset investments, which some traders may not know, depending on the information they get.