FTX Saga Not as Bad as Previous Crises in the Year

According to a blog post, Chainalysis believes that the effects of FTX’s collapse are not as massive as those of other “market-shaking events” that occurred in Q2 and Q3.

Recall that FTX and its affiliated entities filed for voluntary Chapter 11 bankruptcy protection in November amid concerns that its top executives had mishandled customer funds.

Before the FTX saga, the crypto industry had experienced the collapse of the Terra-Luna ecosystem, which saw the value of its native tokens LUNA and UST plunge to nearly zero, with billions wiped from the market.

The Terra-Luna fiasco sparked a contagion that led to the collapse of several firms, including major crypto hedge fund Three Arrows Capital (3AC) and crypto lender Celsius Network.

The Chainalysis report shows that losses stemming from FTX’s fall are minimal compared to those recorded due to the demise of the Terra-Luna ecosystem, 3AC, and Celsius.

The blockchain analytics firm used an on-chain methodology that compared the price differences between the value of assets in each wallet during their acquisition and transfers to another wallet.

FTX Investor Impact Totalled $9B in Losses

Data obtained through Chainalysis’s methodology shows that realised losses for investors amounted to $20.5 billion and $33 billion in the Terra-Luna, Celsius, and 3AC saga, respectively. However, investors lost just $9 billion in the case of FTX.

Chainalysis pointed out that the charts used did not take everything into account, giving an instance of FTX users whose funds are locked on the exchange with uncertainty on their recovery.

“But from a market-wide point of view, the data above suggests that as of now, the heaviest hitting crypto events of 2022 were already behind investors by the time the FTX debacle took place,” Chainalysis added.

~ By William A. Frederick ~