Crypto investment firm Nickel Digital Asset Management has around $12 million of its funds' capital stuck on FTX after the exchange halted client withdrawals and filed for bankruptcy protection.
That figure amounts to about 6% of its $200 million in assets under management, founder partner and chief investment officer Michael Hall said at the City & Financial Global conference in London. Around a third of Nickel Digital's funds on FTX were insured, he added.
Founded in 2019, Nickel Digital serves institutional investors. The London-based firm is authorised and regulated by the UK's Financial Conduct Authority and registered with the U.S. Commodity Futures Trading Commission, according to its website.
Hall said Nickel Digital only trades on large, profitable exchanges and initially avoided using FTX. "We looked at them and saw that the bid-offer spreads were quite tight. That was probably Alameda taking advantage... so we didn't see any advantage to trading on FTX," he said.
But Nickel started to use FTX in 2021 after the crypto exchange operator raised money from big-name institutional investors. "We relied on the due diligence of equity investors. We thought they were the smart money. It turned out not to be," Hall said.
FTX's high-profile investors
FTX raised $1.8 billion in total funding and was valued at $32 billion before it filed for bankruptcy protection last week. The company had high-profile investors, including Temasek, Paradigm and Sequoia Capital, and all three of them recently wrote down their investments to zero.
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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