The collapse of FTX has some commentators suggesting the bankrupt cryptocurrency exchange could produce investor losses or wider fianncial damage on the scale of Lehman Brothers in 2008.
Perhaps others might be tempted to compare FTX bankruptcy impact to investor losses from Enron the early years of the century. I just cannot see that.
FTX had perhaps $32 billion in equity value a year ago. Enron investors lost perhaps $74 billion. Lehman Brothers had equity losses of about $60 billion (by some accounting $46 billion in equity destruction) although debt holdings were far larger, up to $613 billion or so, balanced against assets.
But Lehman equity and debt losses, in total, might have reached as much as $135 billion.
At least so far, FTX does not begin to approach the damage triggered by Enron’s collapse or Lehman Brothers demise. Enron’s bankruptcy occurred at about the time of the “Dot Com Collapse” around the turn of the century, which destroyed hundreds of billions of dollars of equity value in telecommunications and technology and app firms.
Lehman’s bankruptcy helped bring on the global Great Recession of 2008. So far, FTX appears to pose none of that magnitude of danger.
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