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.