Crypto Operator CoinShares Reveals 11% Of Assets Exposed to FTX

Emily Nicolle, Bloomberg News

LONDON, ENGLAND - NOVEMBER 10: In this photo illustration a notice warning against deposits, and that FTX is currently unable to process withdrawals, is displayed on a screen on November 10, 2022 in London, England. The Bahamas-based crypto exchange's larger rival, Binance, walked away from a potential bailout deal, as FTX struggles with a wave of customer withdrawals that have created a liquidity crunch. (Photo Illustration by Leon Neal/Getty Images) , Photographer: Leon Neal/Getty Images Europe

(Bloomberg) --

Europe’s largest digital asset investment firm CoinShares International Ltd said it had about $30.3 million in cryptocurrencies and other assets stuck on collapsed exchange FTX, making it the latest in a string of major firms to get caught in the fallout from the crisis.

The brokerage’s exposure to FTX -- which represents around 11% of its total net asset value -- consists of around $25.9 million in US dollars and USDC, a dollar-pegged stablecoin, it said in a statement to Bloomberg News. Pending withdrawals also include 190 Bitcoin and 1,000 Ether, worth $3.2 million and $1.2 million, respectively, at current prices.

The assets had been part of its capital markets division and proprietary trading activities, CoinShare’s chief executive Jean-Marie Mognetti said in an interview. Coinshares’s hallmark exchange-traded products business is unaffected by the potential loss and the company has no exposure to Alameda Research, a trading outfit co-founded by FTX’s CEO Sam Bankman-Fried, Mognetti added.

CoinShares stock dropped as much as 6.6% earlier in Thursday’s session, before paring the decline to 0.5%.

FTX began experiencing severe delays with withdrawals from its platform on Monday, following widespread speculation about the exchange’s financial health as the value of its own native FTT token plummeted. A potential takeover deal with rival exchange Binance fell apart on Wednesday evening, and Bankman-Fried warned investors of a potential bankruptcy if his firm can’t secure funds to cover a shortfall of as much as $8 billion.

Read more: FTX Hurtles Toward Bankruptcy With $8 Billion Hole, US Probe

Once valued at $32 billion, FTX and Bankman-Fried were held up by many as the poster children for crypto, a factor which heightens the potential for contagion from their sudden collapse. Other firms that revealed they took a hit from FTX’s demise include Amber Group, Wintermute, Galaxy Digital Holdings Ltd. and Sequoia Capital.

“For too long, things like FTX have been perceived by investors as a quasi-bank or quasi-financial institution which it is not,” Mognetti said in an interview on Thursday. “We can all trade crypto at an exchange, but you are exposing yourself to a variety of risks which are not really in your favor.”

Sweden-listed CoinShares, which offers exchange-traded products tracking the prices of Bitcoin, Ether and other cryptocurrencies, also operates a tracker for FTX’s token FTT. The value of the CoinShares FTX Physical FTX Token product (ticker: CFTT) has slumped more than 90% since the close of trading last week, reflecting the crash in spot FTT prices elsewhere.

Mognetti said the firm’s asset management team was monitoring the “fluid” situation around FTT and CoinShares’s other FTX-linked ETP -- a product tracking the price of staked Solana tokens -- very closely.

“It’s still liquid in both directions, poeple can take money in or out,” he said, adding that an update would be issued in due course.

(Adds CoinShares’ stock moves in fourth paragraph)