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FalconX says finances strong despite FTX exposure

Finance firms • December 9, 2022, 11:26AM EST

Quick Take

FalconX told clients that its financial health is strong despite exposure to FTX.
Balances locked on the collapsed exchange represented 18% of unencumbered cash equivalents.

FalconX, the crypto prime broker, told clients its finances are strong despite the exposure it had to collapsed crypto exchange FTX.

"FalconX balances locked on FTX represented 18% of our unencumbered cash equivalents," the company said in an email sent yesterday to clients obtained by The Block. "This ratio was within our counterparty exposure limits."

In the event nothing is recovered from FTX, FalconX said it remains "one of the best-capitalized firms in digital assets." It said it had "decades of runway" and a debt-to-equity ratio of 4%. In addition, it noted that 80% of its balance sheet was in regulated U.S. banks.

FalconX said it has no exposure to FTX's sister hedge fund Alameda Research, trading firm Genesis or crypto lender BlockFi.

The company noted a bright spot amid the market turmoil, saying that its market share had increased as clients seek out proven partners.

"Our volumes have grown 80%+ month-over-month, and we continue to trade billions of dollars in daily volume with clients," FalconX said. "We remain confident in the future of crypto and are committed to leading the industry’s maturation.'

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.

About Authors

Nathan Crooks is the U.S managing editor at The Block, based in Miami. He was previously at Bloomberg News for 12 years, where he helmed coverage of South Florida after roles as a breaking news editor and bureau chief in Caracas, Venezuela. He's interviewed presidents, government ministers and CEOs, and, besides crypto, has covered major news events on the ground from earthquakes to hurricanes to the Chilean mine rescue in 2018. Nathan, a native of Clarion, Pennsylvania, holds a bachelor's degree from the University of Toronto, where he completed a specialist in political science, and an MBA from American University in Washington, D.C.

Frank Chaparro is Host of The Scoop podcast and Director of Special Projects. He also writes a biweekly newsletter. Chaparro started his career at Business Insider, where he specialized in the intersection of digital assets and Wall Street, market structure, and financial technology. Soon after joining Business Insider out of Fordham University, Chaparro was interviewing top finance and tech executives, including billionaire Mark Cuban, “Flash Boys” star Brad Katsuyama, Cboe Global Markets CEO Ed Tilly, and New York Stock Exchange President Tom Farley. In 2018, he become a sought after reporter in the crypto world, interviewing luminaries such as Tyler Winklevoss, the cofounder of Gemini, Jeremy Allaire, the CEO of Circle, and Fundstrat head Tom Lee. For inquiries or tips, email [email protected].