Crypto markets hit harder by Terra, Celsius and 3AC than FTX: Chainalysis

Quick Take

  • The collapse of Terra’s algorithmic stablecoin hit the wider crypto markets harder than FTX’s implosion.
  • The failures of Celsius and Three Arrows Capital also caused more realized losses.

The collapse of the crypto exchange FTX wasn't the most impactful event for crypto investors this year — at least from a market-wide perspective. That award is shared by the de-pegging of Terra's algorithmic stablecoin and the subsequent collapses of crypto lender Celsius and hedge fund Three Arrows Capital.

Terra's UST de-pegged and ultimately collapsed in May. Contagion stemming from the collapse then contributed to Celsius filing for bankruptcy and the implosion of Three Arrows Capital in July. FTX later experienced a liquidity crunch after allegedly misusing customer funds and filed for Chapter 11 bankruptcy protection in November. Former CEO Sam Bankman-Fried has since been arrested in The Bahamas and charged with criminal fraud. 

According to crypto analytics firm Chainalysis, UST's collapse caused $20.5 billion in realized losses for investors. Meanwhile, the failure of Celsius and Three Arrows Capital caused $33 billion in losses. FTX's collapse caused 'only' $9 billion in realized losses.

Chainalysis's report admits that FTX was the most personally impactful event for some, as they will "likely lose any funds they kept on the exchange, and the likelihood of recovering them is unknown." However, the firm notes that "the heaviest hitting crypto events of 2022 were already behind investors by the time the FTX debacle took place" — from a market-wide point of view.

Chainalysis conclusions come after measuring realized gains and losses for a set of personal wallets in a given period — which provides "a directional sense of when investors lock in gains and losses."

Disclaimer: Beginning in 2021, Michael McCaffrey, the former CEO and majority owner of The Block, took a series of loans from founder and former FTX and Alameda CEO Sam Bankman-Fried. McCaffrey resigned from the company in December 2022 after failing to disclose those transactions.


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