The collapse also caused a domino effect, with serious consequences for companies exposed to the troubled exchange rate. Here’s a quick rundown of the companies impacted by FTX’s abrupt demise, as well as the level of their exposure to the troubled cryptocurrency exchange.
Following the FTX disaster, some companies suspended withdrawals.
With FTX suspending withdrawals, companies that have invested in the exchange no longer have access to their cash and are now suffering from liquidity problems. For example, BlockFi was one of the first sites to suspend withdrawals following the FTX crash. Following Terra’s collapse earlier this year, the lender faced insolvency.
FTX, on the other hand, stepped in and provided BlockFi with a $400 million revolving credit line. However, with FTX currently in the doldrums, BlockFi was forced to suspend withdrawals on Nov. 11 and could once again face insolvency. To reduce operating expenses, the company is also exploring job cuts.
Companies with money invested in FTX
Following the FTX crash, several lenders and cryptocurrency exchanges were forced to halt withdrawals. However, there is an even longer list of companies whose funds are stuck on the insolvent exchange. For example, Coinbase, one of the world’s leading cryptocurrency exchanges, said on Nov. 8 that it has around $15 million in deposits on the exchange.
Galaxy Holdings filed its third-quarter results report on Nov. 9, the same day that FTX ceased withdrawals. According to the statement, Galaxy had more than $76 million of FTX exposure, $47.5 million of which was “in the process of retiring” at the time. However, it is unclear how much money is still stuck in the exchange and how much money has been recovered.
FTX investment is written off by venture capital firms.
All exposures pale in comparison to the damage VC firms could suffer if FTX cannot be recovered. Sequoia Capital, for example, has invested nearly $215 million in FTX operations around the world and in the United States. However, following the collapse of the cryptocurrency exchange, Sequoia reduced its stake to $0. Similarly, Temasek Holdings, a Singaporean venture capital firm, said it would write down its $275 million stake in FTX.com regardless of the exchange’s bankruptcy proceedings.
The failure of FTX sent shockwaves throughout the crypto ecosystem, affecting hundreds of organizations around the world that were partners of FTX and its subsidiary Alameda Research. The aftermath of the FTX accident is not fully known as the effects will be noticeable for some time.