FTX Collapse Has Impacted Nearly 5 Lakh Indians: Crypto Exchange Giottus

The month of November 2022 was a shocker for crypto investors across the world as crypto exchange FTX filed for bankruptcy. While the event affected investors across the globe, Indian crypto exchange Giottus has estimated that the FTX collapse fall has impacted nearly 5 Lakh Indians.

“The FTX crash has hit many people. We estimate that 3-5 Lakh Indians would have had exposure to the exchange and its token FTT. The investors who lost money in the FTX saga are in agony. It is unlikely that they will get all their investments back even if FTX receives extra funding via a takeover etc,” Zee News quoted Giottus CEO Vikram Subburaj as saying. 

The report further added that experts and investors are closely monitoring the developments in international crypto exchanges since FTX collapse has had a negative influence on their investments. 

Industry stakeholders believe that FTX collapse saga is one of cleansing of the crypto ecosystem by eliminating companies with weaker fundamentals. 

The Terra, FTX Collapse & Aftermath

The year 2022 has been a difficult one for cryptocurrency investors across the globe. The fall of Terra Luna and the subsequent bankruptcy of FTX has made many investors wary of the blockchain phenomenon. 

For the uninitiated, despite calling itself “the most regulated exchange on the planet”, FTX was highly illiquid. It held only $900 Mn in sellable assets against liabilities of $9 Bn. Thus, when investors started selling off their holdings on FTX, the exchange had nowhere to go. Subsequently, it filed for bankruptcy. 

The crash of cryoto token Luna triggered shutdown of numerous entities, including Vauld, Celsius, Three Arrow Capital, Voyager and more (in India and abroad). With FTX filing for bankruptcy, 130+ affiliate companies will be impacted globally.

While Indian crypto exchanges have been pushing the narrative of being ‘rock solid’, investors are coming to terms with the lack of transparency. Most stakeholders believe that crypto as an asset class needs a regulatory framework to ensure consumer protection and transparency. 

However, regulations alone would not help, according to experts, and there is also a need for investor education. 

There is uncertainty around crypto regulations in the country. While the government hasn’t made its stance clear from a policy perspective, it has introduced a tax on income earned from crypto assets and TDS on crypto transactions. 

Meanwhile, the Reserve Bank of India (RBI) continues to be a staunch opponent of private cryptocurrencies. One of the objectives of the recently-launched central bank digital currency (CBDC) by the RBI is to reduce the popularity of private cryptocurrencies.

Note: We at Inc42 take our ethics very seriously. More information about it can be found here.