On Monday, November 14, 2022, crypto asset manager Ikigai revealed that it held the majority of its funds with FTX, while troubled lender BlockFi hired Berkeley Research Group.
“FTX accounted for a large segment of the hedge fund’s total assets.” “By the time we went to withdraw Monday [morning], we had very little out,” Ikigai Chief Investment Officer Travis Kling said on Twitter. “We’re now stuck with everyone else.”
Kling also stated that the hedge fund would decide what to do with its venture fund, which was unaffected by FTX and raised $30 million from existing investors in May.
The venture fund’s uncertain future highlights the trust issues many crypto firms are dealing with in the aftermath of FTX’s massive balance sheet shortfall and bankruptcy.
“It was entirely my fault and no one else’s,” Kling tweeted. “I lost my investors’ money after they put their trust in me to manage risk, and I sincerely apologize.” I apologize for publicly endorsing FTX on numerous occasions. “I was mistaken.”
Several crypto firms, like Ikigai, are publicly declaring how much—if any—assets they had on FTX’s platform prior to its bankruptcy filing last Friday.
Genesis Trading, CoinShares, Galaxy Digital, Wintermute, Crypto.com, Matrixport, and hedge fund Galois Capital are among those on the list. While not all have declared how much they will seek in bankruptcy, the amounts have ranged from $4 to $175 million.
BlockFi, the crypto lender that FTX bailed out of financial trouble this summer with a $400 million line of credit, also provided a public update on Monday.
“The rumours that the majority of BlockFi assets are held at FTX are untrue. Having said that, we do have significant exposure to FTX and associated corporate entities, which includes Alameda obligations, assets held at FTX.com, and undrawn amounts from our credit line with FTX.US.”
The update comes on the heels of the company’s decision on Thursday to halt customer withdrawals, as well as reports that its credit card is no longer working for customers.
In addition, BlockFi has hired Berkeley Research Group, which assisted Voyager Digital in marketing its assets during its bankruptcy proceedings.
BlockFi had not responded to media requests for additional comments at the time of publication.
While much smaller in scale, the unwinding of FTX may resemble that of MF Global, the commodities hedge fund that failed in 2011, according to Greg Plotko, a Crowell & Moring legal partner who previously worked on the Enron bankruptcy.
Plotko believes that, like MF Global, FTX’s customer base is primarily comprised of institutional investors and traders, which may entice several creditors to exit their positions by selling claims on their assets.
However, the larger implications for the crypto industry may revolve around trust.
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