FTX will be the last giant to fall this cycle: Hedge fund co-founder

This bear market has seen the collapse of Celsius, Three Arrows Capital, Voyager and now FTX, but the worst is probably over, a hedge fund executive suggests.

As the FTX crisis continues to unfold, the former head of risk at Credit Suisse believes that the stock market crash should be the last catastrophic event, at least in this market cycle.

CK Zheng, former head of valuation risk at Credit Suisse and now co-founder of crypto hedge fund ZX Squared Capital, said FTX's fall was part of a "deleveraging process" that began after the COVID-19 pandemic and accelerated further after the fall of Terra Luna Classic (LUNC), formerly Terra (LUNA).

"When LUNA exploded a few months ago, I expected a huge deleveraging process to kick off," said Zheng, who later speculated that FTX should be the last of the " biggest" actors to be "cleaned up" during this cycle.

Before its collapse, FTX was the third largest crypto exchange by volume after Binance and Coinbase.

"I'm sure there are several players who will probably be impacted [...] in the coming weeks, you know, small, large - but I would say this one in terms of magnitude will be the one of the most important before the whole cycle really ends.

On Nov. 14, crypto exchange BlockFi admitted to having “significant exposure” to FTX and its affiliates. A day later, a Wall Street Journal report suggested he was preparing for a potential bankruptcy filing.

A number of exchanges also halted withdrawals and deposits this week, citing exposure to FTX, including crypto lending platform SALT and Japanese crypto exchange Liquid.

On November 16, institutional crypto lender Genesis Global announced that it would temporarily suspend withdrawals citing "unprecedented market turmoil".

The fate of these companies remains to be determined.

Zheng noted that moments like this are all normal signs of...