The collapse of FTX affected people all over the world. Institutions, sports franchises, celebrities and small retail investors felt the effects of the FTX bankruptcy.
Whether investors directly held money on the FTX platform, held the FTX token, or simply held other cryptocurrencies, the effects were widespread and enormous.
Such large consequences have a knock-on effect, as many cryptocurrency investors fear for their assets. The collapse of FTX meant many sell-offs of other cryptocurrency holdings and scrutiny of other large cryptocurrency exchanges. The fear has sent the prices of assets such as Bitcoin and Ethereum crashing, and many fear this is not the end.
FTX has managed to get away with many alleged abuses due to a lack of transparency, oversight and greed.
Unfortunately, this type of behavior from such a large, trusted company in the crypto space has left a sour taste in people’s mouths. It will be a long time before people trust crypto institutions again, and many people fear that this fiasco has set back the cryptocurrency adoption process by several years.
Unfortunately, while many Canadians were indirectly affected by the collapse of FTX, several Canadian organizations and individuals were directly affected.
$95 million has been invested in the Ontario Teachers’ Pension Plan to FTX through its teacher development platform for teachers to gain exposure to the industry.
Fortunately, this investment is not a major disaster, as it represented only 0.095% of the shares.
It was supposed to be Bitvo, a Canadian cryptocurrency exchange acquired by FTX for the exchange to enter the Canadian market. The deal was expected to close in the third quarter of 2022, but that didn’t happen, fortunately allowing Bitvo to escape the disaster largely unscathed.
However, FTX has invested in LayerZero Labs, a Vancouver-based company building “layer zero” blockchain. LayerZero issued a statement that it has purchased FTX’s stake in LayerZero and remains well capitalized.
Toronto FinTech startup Delphia does too received funding from FTX in 2022, as does Burnaby startup Vybe Network. It is unclear how the collapse of FTX affected these new companies.
Through Alameda, a trading company affiliated with FTX, FTX was affiliated with WonderFI, owner of Canadian exchanges Bitbuy and Coinberry. WonderFi allayed some concerns by announcing that the investment in FTX represents only 0.2% of its assets and will not have a “significant impact on its business.” The company further noted that none of its subsidiaries, including Bitbuy and Coinberry, had any exposure to the FTT, FTX or Alameda token.
Toronto-based DeFi company Smooth meta announced that it had initiated a $4.3 million withdrawal from FTX, but FTX suspended withdrawal requests days before the collapse. At this time, it is unclear whether Liquid Meta will ever receive the money.
It is clear that the collapse of a large crypto institution like FTX affects many people. To be as safe as possible in cryptocurrency, we recommend that Canadian cryptocurrency investors continue to primarily use Canadian exchanges as they are regulated by FINTRAC. Strict regulatory rules ensure that Canadian cryptocurrency exchanges protect customer funds.
Jade Alberts, vice president of Canadian Blockchain Consortiumsaid Canadian organizations such as cryptocurrency exchanges “protect consumers, cooperate with regulators and actively seek a clear regulatory framework.”
