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FalconX is a global crypto trading platform that is used by financial institutions.
On Thursday, December 8th, FalconX announced in a blog post that the company has an exposure of 18% of its "unencumbered cash equivalents".
It was an odd road to this point, but FalconX are finally confirming the amount of their asset exposure to FTX.
On November 22nd, FalconX CEO Raghu Yarlagadda appeared on Bloomberg TV and was interviewed regarding the collapse of FTX, and basically tried to avoid any questions of asset exposure.
The CEO was asked point-blank if FalconX had any assets on FTX, but he asks for the question to be repeated.
The interviewer asks a second time about any assets on FTX and Raghu avoids the question and says something about the FTX recovery process being complicated.
After dodging the question two times, the interviewers asked for a third time, to which Raghu finally admitted some exposure to FTX by saying FalconX was "operating within our risk tolerance," and that they "walked out of this with a small position relative to our balance sheet."
The odd exchange of questions starts around the 1:20 minute mark.
Here is the video of that interview:
https://www.bloomberg.com/news/videos/2022-11-22/falconx-ceo-on-ftx-bankruptcy-genesis-meltdown-video
Regardless of the 18% loss of "unencumbered cash equivalents", FalconX is confident that they have enough capital to continue for decades.
They may be confident as FalconX was recently recognized as the Most Innovative FinTech Solution2022 Tech Ascension Awards
In a 0% recovery scenario of FTX balances, FalconX remains one of the best-capitalized firms in digital assets. We have decades of runway, and we are highly liquid with a 4% debt-to-equity ratio with over 80% of our balance sheet in regulated U.S. banks. Furthermore, we have no exposure to Genesis, Alameda, or BlockFi.
I found it almost comical how the CEO danced around the questions regarding asset exposure, only to finally admit it in the end.
On the other hand, I guess FalconX must either be putting on a confident front, or they really do have enough capital to withstand this situation despite the losses from FTX.
I guess only time will tell if they their confidence will bite them in the rear.
Will the fallout of FTX ever end?
Do you think we will ever know the full impact of the collapse of FTX?
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