Large lending institutions like Celsius, Voyager, and BlockFi, as well as the FTX exchange, all fell during the crypto crisis that began with the collapse of Terra (LUNA) in May of last year. The Chicago office of the Fed conducted a crucial study on the issue .
FTX and Luna Were Caught Unprepared
Fed analyzed the withdrawals on the platforms before Celsius’s, BlockFi, Genesis Global, Voyager and FTX’s bankruptcies using data collected from bankruptcy court filings . The examination found that none of the platforms were prepared for a such scenario including FTX and Terra (LUNA).
Celsius, the firm that made a major impact in the crypto money industry and where the first insolvency signs arrived following Terra (LUNA) and 3ACi was the subject of a separate study and the results were intriguing . Fed’s analysis found that 35% of those who carried out these trades just before the platform stopped withdrawals were high-net-worth individuals .
It was also said that clients with balances of $500,000 were the ones who made the fastest withdrawals and they currently have access to the majority of their assets . This means those people saw the collapse coming and quickly abandoned the ship .
Most of the Smaller Players Withdrew Their Funds in The Last Days Possible
Twenty percent of withdrawals in Celsius occurred between May 9 and May 20, while 9.8 percent occurred between June 9 and June 12 . Celsius CEO Alex Machinsky reportedly sold his personal belongings at the end of May . Two weeks after suspending withdrawals on June 12 Celsius filed for bankruptcy .
The fact that FTX also shows such similar withdrawals to Celsius is quite important . According to data 36.7% of all withdrawals were made in the last 5 days before the stock market collapsed in November 2022 . Economist Jonathan said that this was a classic financial crisis scenario and it should not be that shocking .
