Oleg Galeev

2 weeks ago

How Has FTX’s Collapse Affected Canadians? 

FTX and Canada

 

FTX’s collapse has affected people all over the world. Institutions, sports franchises, celebrities and small retail investors alike have suffered the effects of FTX’s bankruptcy.

Whether investors directly had money on the FTX platform, held the FTX token, or simply held other cryptocurrencies, the effects have been widespread and enormous. 

A big fallout such as this has a knock-on effect with many crypto investors becoming scared for the assets they have. FTX’s collapse meant many sell-offs of other crypto holdings and scrutiny of other large crypto exchanges. The fear caused assets such as bitcoin and Ethereum to drop in price and many worry that it is not the end.

FTX managed to get away with many alleged wrongdoings due to the lack of transparency, oversight, and greed. 

Unfortunately, this type of behaviour from such a large, trusted company within the crypto space has left a sour taste in people’s mouths. It will take a long time for people to trust crypto institutions again and many people fear that this fiasco has set the crypto adoption process back several years. 

Unfortunately, while many Canadians have felt the effects of FTX’s collapse indirectly, there have been several Canadian organizations and individuals affected directly as well.

The Ontario Teachers’ Pension Plan invested US$95 million into FTX through its Teachers’ Ventures Growth Platform to gain exposure to the industry. 

Luckily, this investment is not a major disaster since the investment represented just 0.095% of its holdings. 

Bitvo, a Canadian crypto exchange, was due to be acquired by FTX so the exchange could enter the Canadian market. The deal was set to close in Q3 2022, but it had not, luckily allowing Bitvo to escape the disaster largely unaffected.

However, FTX did have investments in LayerZero Labs, a Vancouver-based company building a “layer zero” blockchain. LayerZero released a statement that they bought out FTX of their stake in LayerZero and remain well-capitalized. 

Toronto FinTech startup Delphia also received funding from FTX in 2022 as did Burnaby startup Vybe Network. It’s unclear how the FTX collapse has affected these new businesses. 

Through Alameda, FTX’s affiliated trading firm, FTX had ties to WonderFI, which owns Canadian exchanges Bitbuy and Coinberry. WonderFi relieved some fears when it announced that its investment in FTX only represented 0.2% of its assets and it would not have “a sizable impact on its business.” The company further noted that none of its subsidiaries including Bitbuy and Coinberry had exposure to the FTT token, FTX, or Alameda.

Toronto-based DeFi firm Liquid Meta announced that it had initiated a withdrawal of $4.3m from FTX but FTX halted withdrawal requests during the days before its collapse. It’s unclear at this point if Liquid Meta will ever receive their money. 

It’s evident that when a large crypto institution like FTX crumbles, it affects many people. To be as safe as you can in crypto, we recommend that Canadian crypto investors continue to primarily use Canadian exchanges since they are regulated by FINTRAC. The strict regulatory policies ensure that Canadian crypto exchanges protect customers’ funds. 

Jade Alberts, vice president of the Canadian Blockchain Consortium, said Canadian organizations such as crypto exchanges “protect consumers, work alongside with regulators, and actively seek a clear regulatory framework.”

  • News

Author

Oleg is a Canadian citizen & crypto expert who has been trading since 2016. He started out with Coinbase, Kraken and Peer-to-Peer exchanges. After some time, centralized exchanges started charging crazy fees to their users.

He decided to review different crypto exchanges that operate in Canada and start a Youtube channel in order to educate Canadians on what kinds of things are going inside each one while giving them unbiased advice. On top of that, Oleg also has experience with NFT, airdrops, and crypto staking and he is constantly checking on new crypto assets.

His writing has been featured in popular Canadian media sources such as Toronto Sun and Ottawa Citizen.