FTX collapse not the worst for crypto investors this year, says Chainalysis study

While the bankruptcy of Sam Bankman-Fried’s cryptocurrency exchange FTX has dominated headlines at the end of this year, it doesn’t represent the biggest losses for crypto investors in 2022, according to a Wednesday report from US-based blockchain analytics firm Chainalysis.

Fast facts

• The report says that the collapse of the Terra Luna stablecoin UST in May and the implosion of lending platform Celsius and the hedge fund Three Arrows Capital (3AC) a few weeks later drove the highest realized losses in individual crypto investments this year.
• TerraUSD, or UST, was an algorithmic stablecoin — a digital asset pegged to the value of the US dollar — which crashed in May, losing almost all its value after previously having a market capitalization of as high as US$40 billion. The collapse then triggered the bankruptcy of Celsius and 3AC over the summer.
• Based on data of weekly realized gains and losses of all personal crypto wallets, Chainalysis estimates that the Terra Luna crash resulted in US$20.5 billion in realized losses, while the fall of Celsius and 3AC wiped out US$33 billion.
• According to a report on FTX from crypto analytics firm Nansen, major losses at FTX that eventually contributed to the collapse of Bankman-Fried’s crypto empire likely also occurred in the aftermath of Terra Luna’s implosion.
• The bankruptcy of FTX resulted in about US$9 billion in realized losses, said Chainalysis. However, the report notes that this does not include the assets of investors that have been frozen on the FTX exchange.
• FTX’s demise has left an estimated 1 million investors without any certainty they will get their assets back, according to bankruptcy filings. At least US$8 billion in funds are missing, according to Tuesday charges against Bankman-Fried from the Commodities Futures Trading Commission.

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