Funds stuck on FTX, various hedge funds fear losing stakes

    TheMorningCrypto Desk
    TheMorningCrypto Desk
    Published on November 16, 2022 7:25 PM

    Updated on January 9, 2023 12:50 PM

    Nestcoin fired at least 30 employees due to a fund crisis as reported. The remaining employee will get a 40% reduced salary
    Funds stuck on FTX, various hedge funds fear losing stakes
    Source: Reuters

    The fall from the grace of cryptocurrency trading platform FTX has left many investors and those they trusted with their money rushing to pick up the pieces.

    A number of crypto hedge funds, in particular, have admitted to having varying degrees of exposure to the now-defunct FTX exchange. While some believe the crypto market will weather the storm, others are sceptical that investor confidence can be restored.

    Nestcoin lay-offs employees due to FTX collapse

    Nestcoin, an African web3 firm, has laid off some employees as a result of FTX's implosion. The business's CEO, Yele Bademosi, shared this information in a tweet, saying that FTX's demise damaged his one-year-old startup, which maintained assets (cash and stablecoins) on the now-defunct crypto exchange to manage operational expenses.

    There have been numerous allegations of companies' money being trapped in FTX, its crypto exchange platform. Some of them are Galois Capital, a hedge fund with half of its capital trapped on the defunct crypto exchange; Genesis Trading, which had about $175 million locked on the crypto exchange; and Multicoin Capital, the well-known crypto and web3 venture capital firm with nearly 10% of its assets under management trapped on the defunct crypto exchange.

    Nestcoin joins the increasing list (new names are being revealed by the day); it looks that the majority, if not all, of its assets, are locked in FTX.

    According to various sources, companies that have money on FTX may be able to get it back depending on how much FTX's assets are ultimately worth. According to its 23-page bankruptcy filing, FTX has over 100,000 creditors, assets ranging from $10 billion to $50 billion, and liabilities in the same range.

    Galois capital’s funds are locked on FTX

    Galois Capital is the latest hedge fund to be caught off guard after over half of its assets were locked on the defunct crypto exchange FTX on Saturday, with an estimated value of $100 million.

    According to a letter reviewed by the magazine, Galois co-founder Kevin Zhou wrote to investors in recent days that while the fund had been able to withdraw some money from the exchange, it still had "approximately half of our capital stranded on FTX."

    FTX's quick demise was precipitated by widespread concern about its financial health, which prompted $6 billion in withdrawals in just 72 hours earlier this week. As recently as January, the corporation published a valuation of $32 billion.