Approximately 11% of the total net asset value of CoinShares, Europe’s largest digital asset investment and trading group, is stuck on the crypto exchange FTX. Mike Novogratz’s Galaxy Digital, which is also having similar problems, has more than $76 million in exposure to the struggling company.
CoinShares affected by FTX
CoinShares recently told Bloomberg that almost $26 million of their exposure to FTX is composed of USD and Circle’s stablecoin USDC. More than $4 million is still seeking withdrawal, consisting of 190 BTC and 1,000 ETH. According to CEO Jean-Marie Mognetti, the assets were used for proprietary trading in the company’s capital markets division.
He added that the exchange-traded funds were unaffected by the losses incurred. Neither FTX nor its sister firm, Alameda Research, pose any risk to the institution.
The FTX turmoil started a few days ago when Binance chose to sell off all of its FTT tokens, problems began arising for SBF’s trading venue. The coin’s value has plummeted since the news. After assuring investors that FTX and its assets were “Fine“, Bankman-Fried suspended some operations, including withdrawals, prompting widespread fear. The CEO reversed course within hours, claiming Binance will buy his trading platform to fix the exchange’s liquidity problems.
Despite initially confirming the news, the largest cryptocurrency exchange in the world rescinded its plans to acquire FTX, citing “the issues are beyond our control or ability to help.”
The CEO of CoinShares said trading cryptocurrencies on exchanges may be convenient, but it hides risks. He said:
“For too long, things like FTX have been perceived by investors as a quasi-bank or quasi-financial institution, which it is not. We can all trade crypto at an exchange, but you are exposing yourself to a variety of risks which are not really in your favor.”
An ETF called FTX Physical FTX Token is available through CoinShares which has fallen by more than 90% since FTX collapse.