Industry Updates

Flow Traders reduces crypto exposure following FTX collapse

The market maker sees "opportunities" in the crypto space following the volatility

Theo Andrew


One of Europe’s largest market makers Flow Traders has said it reduced its exposure to crypto platforms following the collapse of FTX in November.

In its Q4 2022 results, the liquidity provider revealed it has an “immaterial exposure” to Sam Bankman-Fried’s now defunct crypto exchange and that it “continues to manage risk effectively”.

“Our robust and prudent approach to risk management meant that we were immaterially affected by the collapse of FTX in November,” Folkert Joling, chief trading officer at Flow Traders, said.

“As to be expected, we reduced our overall trading capital exposure to the various crypto platforms we trade with, fully recognised the risk present in the broader crypto market. The trading capital was naturally deployed to other areas of the business.”

Despite this, Flow Traders said developments across digital asset markets have led to “a number of strategic investment opportunities arising at more attractive valuation points”.

To date, the firm has committed €25.3m across 23 investments in the crypto industry.

Joling added that Flow Traders maintains its conviction around the “long-term potential” of crypto and DeFi to disrupt trading and financial markets.

Furthermore, Flow Traders revealed it is supporting the $2bn crypto recovery fund set up by Binance in a bid to improve liquidity for the distressed asset class.

The market maker said it hoped the fund, announced by the CEO of the crypto exchange last November, would ensure greater stability in the broader crypto ecosystem.

The firm did not disclose how much it has contributed to the fund.

Binance initially committed $1bn to help the crypto industry recover following the collapse of rival crypto exchange FTX in November last year, before announcing an additional $1bn Industry Recovery Initiative.

It comes as Flow Traders reported a pre-tax profit of €43.5m in Q4, down 2% from the previous quarter, with exchange-traded product (ETP) trading broadly flat quarter-on-quarter.

However, profit for the full year was up 15% versus 2021 at €150.2m as value traded hit a record over the year.

In October, it was revealed that Flow Traders, along with Jane Street and GHCO, were battling to recoup millions of dollars’ worth of assets after the Russian broker went into administration following the country’s invasion of Ukraine.

The firm did not give an update on the case in its latest results but is due to publish its full-year 2022 results later this month.

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