We know that the consequences of FTX's collapse will gradually become apparent (particularly in Europe). But for some, like the customers of Trading du Coin, the consequences are already well and truly here.
In the space of a few days, the company's customers, mainly French, have lost almost everything. The loss is said to be €10 million, the largest loss to date for a European player in this business.
To understand how the fall was so sudden and so large, you need to know how Trading du Coin - which has since suspended operations - operated. We also need to address the questions that this type of company raises, particularly in terms of mixing genres.
👉 What is it already?
Created in 2018, Trading du Coin describes itself as "the investment arm of Journal du Coin", a well-known crypto news site in France.
While the two companies are not officially part of the same group, they are closely linked: they share the same branding (names, graphic charters) and they have at least two shareholders in common.
Most importantly, the two companies do business together. Until the last few days, the Journal du Coin website offered numerous commercial links to Trading du Coin and its products.
According to Grégory Guittard, the Journal's publishing director, "Trading du Coin was our third largest source of revenue in 2022", while FTX was its largest source of revenue, a detail that matters.
We'll come back to this later.
👉 What did Trading the Coin offer?
Trading the Coin's flagship product is a system of automated trading robots that customers can rent as part of a monthly subscription. This type of service is quite common in crypto.
The problem is that nobody saw the FTX withdrawal freeze coming and the funds could not be withdrawn in time.
The reason for this "block" is simple: Trading du Coin had control over the orders (buy or sell), but could not withdraw the funds to place them safely outside FTX. It was up to users to do this themselves, and only them.
Is Trading du Coin blameless for this? "The company should have sent an email to its customers to alert them to FTX's situation," points out Cyril Gerbet, head of consultancy Genesis Partners.
In particular, its competitor HAL, developed by investment firm CoinShares, sent a message to its users, which we were able to view, before the announcement of the freeze on withdrawals. "A lot of people managed to get their assets out of FTX in less than 24 hours, so it was possible to make an emergency communication," he added.
From the Trading du Coin side, they said they had been "following up daily" on the company's Discord and sent "several emails to our customers prior to our public announcement on 16 November".
One of the other problems, "was that FTX was the only platform offered by Trading du Coin when a service that had been in existence since 2018 should have offered a diversity of choice", Cyril Gerbet continued.
Competing HAL offered (in addition to FTX) Binance and Kraken.
After the FTX crash, and according to our findings, the Trading du Coin site discreetly removed the FTX logo from the list of exchanges used by its robots in order to replace it with that of Binance (the latter has now disappeared). It was this change that prompted several internet users to call the company to account.
"An overhaul of our automated strategy on several other exchange platforms is currently under consideration", say the shareholders of Trading du Coin. "Binance, for its part, is currently being integrated," it continues. As for the exclusive choice of FTX, it justifies this on the grounds of its "high liquidity" and "technical functionalities".
Trading du Coin, which is registered in Estonia, was not content to offer trading robots and was also targeting wealthier clients via "management mandates". According to the site's team, these 'special' users accounted for around half of the €10 million in losses. The smallest customers had €100,000, while the largest had invested up to €300,000.
👉 Commercial contract between the Journal du Coin and FTX
From the Journal du Coin side, Grégory Guittard explains that the media outlet and FTX had signed a contract aimed at highlighting this platform on the Journal through commercial links placed in news articles. "I'm not at all ashamed of the publicity we've been able to generate for FTX. Its reputation was excellent until recently," he says.
But beyond the choice of FTX, it is the exchange system between Journal du Coin and Trading du Coin that is raising quite a few questions.
"There was a problem of neutrality between the two structures," challenges Cyril Gerbet of Genesis Partners. "FTX was a very big partner of both Le Journal du Coin and Le Trading du Coin", he points out.
"It would be less of a problem if Le Trading du Coin and Le Journal du Coin clearly displayed their closeness, but by keeping this façade of independence it can appear misleading to the public", he asserts.
"In the end, we end up with a company based in Estonia to escape regulation, while targeting French individuals", sums up the boss of Genesis Partners. "This situation is aberrant and probably not very legal", argues a player in the French sector.
On the Trading du Coin side, they brush it off. "While our community is essentially French-speaking, we don't particularly target the French. We have customers all over the world", its administrators reply. When questioned, the Autorité des Marchés Financiers declined to comment.
