About 4.3 million investors lost $46 billion in just five months as a result of the collapse of a number of large cryptocurrency firms. This is stated in a study by Radhika Patel and Jonathan Rose from the Federal Reserve Bank of Chicago.
According to the report, in total, crypto users lost $46.5 billion in funds. They were offered a high percentage yield, usually from 7.4% to 9%, but sometimes up to 17%. They were mainly clients of FTX, Celsius, Voyager, BlockFi and Genesis.
“High-yield products have been a key magnet for customers on some platforms. At first glance, the offer for these products was simple and very attractive,” the researchers note.
At the same time, the clients of the FTX cryptocurrency exchange suffered the most — its collapse turned out to be seven times more than any other crypto companies. The exchange reported an outflow of 37% of client funds, almost all of which were withdrawn in just two days. Voyager and Celsius gave way to the collapse of the TerraUSD (UST) stablecoin in May last year, as well as the collapse of the Three Arrows Capital (3AC) hedge fund.
However, the number of clients of each firm at the time of filing for bankruptcy may probably be much less than the peak value, since the popularity of crypto asset platforms declined in the first months of 2022.
The study also indicates that large institutional investors were the fastest to withdraw their money from bankrupt exchanges, while smaller investors left money on the platform.
“In fact, according to our estimates, during this period, 35% of all withdrawals to Celsius were made by account holders with investments of more than 1 million,” the report notes.
Many companies that analysts have noticed have also become involved in the largest cases of financial fraud in the United States. We are talking about FTX, Celsius and BlockFi, whose clients have lost hundreds of millions of dollars due to their collapse.