Key Takeaways
- “18% of FalconX “unencumbered cash equivalents” remain locked on FTX.
- FalconX claims it’s highly liquid and has “decades of runway” in case of a 0% recovery scenario of FTX balances.
Crypto trading platform FalconX revealed that it had a portion of its assets locked on troubled crypto exchange FTX. As per the blog post, “18% of its “unencumbered cash equivalents” remain locked on FTX.
“Recent events have validated our approach to risk management. We are market risk neutral and extend credit overcollateralized on our platform. We utilize real-time risk monitoring, and we operate within the confines of our counterparty exposure limits,” the official blog post reads.
The trading firm further added that in case of a 0% recovery scenario of FTX balances, FalconX said it has “decades of runway” and is “highly liquid with a 4% debt-to-equity ratio with over 80% of its balance sheet in regulated U.S. banks”. FalconX also claimed that its monthly volume has grown by “80%+ month-over-month.”
The company reinstated that it has no exposure to troubled crypto lender Genesis, BlockFi, or Alameda Research- a crypto trading firm affiliated with Sam Bankman Fried’s FTX. The latest FalconX development comes amid SEC publishing new guidelines urging firms to provide more information on their crypto holdings.
The guidelines state that firms should disclose third-party crypto market participants, risks to the company’s liquidity, access to financing, and the potential impact of any “legal proceedings, investigations, or regulatory” matters.
FTX’s implosion has taken down big names in the crypto industry. Many crypto firms have yet to come openly about the FTX collapse’s impact on them. BlockFi, which recently filed for Chapter 11 bankruptcy, had cited its exposure to FTX via loans to Alameda as the reason behind the liquidity crisis.
Recently, Genesis Trading disclosed that it had $175 million in funds locked on the FTX crypto exchange. Crypto insurance protocol Nexus Mutual also revealed a $3 million Ethereum exposure to Orthogonal Trading, a hedge fund that was declared in default on almost $36 million of loans following the FTX implosion.
