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FalconX has 18% of its Funds Locked in Bankrupt FTX

2 mins
10 December 2022, 17:37 GMT+0000
Updated by Paolo Besabella
10 December 2022, 17:37 GMT+0000
In Brief
  • FalconX said its exposure to FTX was 18% of its unencumbered cash equivalents.
  • The firm added that it is highly liquid with a 4% debt-to-equity ratio.
  • Several other crypto firms with FTX's exposure have been negatively impacted.
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Leading crypto brokerage firm FalconX revealed that roughly 18% of its funds are stuck on the bankrupt crypto exchange FTX.

According to the firm’s December 8 press statement, its financial position remains strong despite FTX’s bankruptcy. It revealed that its volumes grew by 80% monthly in the past year despite the current market conditions

FalconX has no Exposure to Other Embattled Firms

FalconX stated that it had no exposure to other embattled crypto firms like Genesis, Alameda, or BlockFi.

However, it said its exposure to FTX was 18% of its cash equivalents. The firm noted that this was within its exposure limits.

In a situation where it cannot recover its funds, FalconX said it remains highly capitalized. The firm claims it is highly liquid and has a debt-to-equity ratio that is less than 5%. It added that 80% of its balance sheet is in regulated U.S. banks.

According to FalconX, the spate of events in the space has validated its risk management approach. It added that it utilizes several risk monitoring systems and it operates within its exposure limits.

FTX Exposure Hurts Others

While FalconX says its FTX exposure hasn’t negatively impacted it, several other crypto firms have had their operations affected.

November to December 2022 FALCX Trend
FALCX 1-Month Trend

Crypto hedge fund Orthogonal Trading defaulted on a $36 million debt due to its exposure to the bankrupt exchange. Maple Finance later cut all ties with the firm because it had misrepresented its finances. Maple Finance said Orthogonal Trading kept “operating while effectively insolvent.”

Another crypto firm impacted by FTX’s implosion was BlockFi. The lender filed for Chapter 11 bankruptcy on November 28. 

Fears of the FTX contagion have raised rumors around Grayscale and its GBTC product. Several community members have speculated about the financial health of the firm’s parent company, Digital Currency Group.

Asia’s leading crypto and lending platform, Amber Group, slashed its workforce and canceled a sponsorship deal with Chelsea Football Club because it also had exposure to FTX.

BeinCrypto also reported that crypto media outlet, The Block CEO Michael McCaffrey, was forced to resign after reports emerged that he got loans from Alameda Research.

In a recent interview, hedge fund manager Mark Yusko said the FTX collapse was like a “big old storm.” Yusko added that Sam Bankman-Fried (SBF) is the bad guy at the center of this storm.


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