'I'm done with crypto': Traders share pain of potential losses in FTX collapse

Quick Take

  • Crypto exchange FTX’s sudden collapse has left crypto traders reeling.
  • Many expressed their surprise and anger as they wonder if they will see their funds again.

Crypto traders took to Twitter to express shock and disappointment in the wake of crypto exchange FTX's collapse.

The industry's history is riddled with major collapses, with many notable ones occurring in 2022. Luna, Three Arrows Capital and Celsius all roiled markets, but the downfall of FTX is perhaps the most surprising to crypto's Twitter faithful.

Prior to the revelations of liquidity issues at FTX, many crypto traders staunchly refused to believe that the exchange could be going under.

“The past 24 hours have been extremely difficult," said a crypto trader known as Kaleo. "I took a huge loss, and an exchange I trusted for years is at the center of one of the largest bank runs we’ve witnessed in crypto. I know I’m not the only [one] impacted by this, & my heart goes out to others in a similar situation." 

Crypto trader Hsaka, who has amassed 392,000 followers on Twitter, weighed in on the vibes in the crypto community having further deteriorated. “Weird concoction of rage, depression, and apathy going on [right now] lol,” he said.

Circle co-founder and CEO Jeremy Allaire yesterday invoked the memory of the Lehman Brothers collapse, one of the signature events of the 2008 financial crisis. In crypto's relatively short history, the collapse of FTX can be compared to similar monumental events like the downfall of bitcoin exchange Mt Gox.

But for the crypto trader known as Cobie, a decade-long industry participant who has amassed a 754,000-strong Twitter following, FTX is the worst exchange failure ever.

"As a reasonably paranoid long-term crypto user, even I held more on FTX than I have on any other CEX in history at times — thinking it “safer” than the old iterations of exchanges," Cobie said.  "After two blowups this year that I would’ve never bet on — maybe I’m just getting old and naive."

Cobie added that he had initially thought there was a less than 1% chance that the exchange would be insolvent.

For others, it was the speed of the blowup that shocked them the most.

“I can't believe this all unraveled so fast,” said Tree of Alpha, an engineer and trader. They claimed that this was the fastest time in crypto that seemingly baseless claims about a company have ended up with insolvency.

A crypto trader known as Algod, known for his $10 million bet against Luna shortly before it collapsed, said that a large amount of his portfolio remains on FTX. He said: “I’m done with crypto, [I] don’t want to feel like this anymore.”

Disclaimer: The former CEO and majority shareholder of The Block has disclosed a series of loans from former FTX and Alameda founder Sam Bankman-Fried.

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