FTX Collapse Not the Worst Market Event for Crypto Investors in 2022: Report

The collapse of cryptocurrency exchange FTX is not the worst market event for crypto investors this year, according to a report by blockchain analytics firm Chainalysis. Per the report, previous crises such as Terra, Celsius, and Three Arrows Capital (3AC) hit investors harder than the FTX implosion.

FTX Debacle Not the Worst for Investors in 2022

The report finds that Terra’s implosion caused $20.5 billion in realized losses for investors, while the collapse of Celsius and Three Arrows Capital caused $33 billion in losses. On the other hand, investors only lost $9 billion to the FTX debacle.

“… 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 said.

Chainalysis, however, noted that the FTX collapse was the most personally impactful crisis for certain investors as they will likely lose any funds they have deposited on the exchange, and the possibility of recovering them can not be determined.

The blockchain analytics firm said it arrived at these numbers by measuring “realized gains and losses for a set of personal wallets in a given period of time,” which gives “a directional sense of when investors lock in gains and losses.”

2022 Market Crises

The de-pegging of Terra’s UST token in mid-May spread contagion across the market, leading to the collapse of Celsius and 3AC a few months later. Both Celsius and 3AC filed for bankruptcy in July.

On the other hand, FTX faced a liquidity crisis in November after its founder and CEO Sam Bankman-Fried (SBF) allegedly misused customers’ deposits on the platform. The cryptocurrency exchange filed for Chapter 11 bankruptcy that same month after it could not solve its liquidy issues. 

A court filing shows that the company has more than one million creditors, owing its largest creditor approximately $226 million. Following FTX’s bankruptcy, several crypto platforms have revealed they still have their funds stuck on the platform.