Most of the customers of failed crypto exchange FTX were institutions but the effects of its collapse are still likely to reverberate across the sector and may affect small retail investors, MPs have been told. “What we’re hearing … is that the majority of the funds in that platform were from institutional investors,” Ian Taylor, the executive director of the industry group Crypto UK, told the Treasury select committee on Monday. “Now there are many UK-regulated crypto exchanges that take retail money and they are at the moment hopefully OK. We’ve not seen anything. But … this is a super fluid situation.” Even as Taylor was speaking in the parliamentary hearing, Travis Kling, head of crypto hedge fund Ikigai, announced his fund had become one of the first serious casualties of FTX’s failure and was now in dire straits. “We had a large majority of the hedge fund’s total assets on FTX,” Kling said. “By the time we went to withdraw Monday [morning], we got very little out. We’re now stuck alongside everyone else. “There’s a lot of uncertainty about what’s going to happen next … At some point, we’ll be able to make a better call on whether Ikigai is going to keep going or just move into wind down mode.” “It’s hard for me to imagine the space bouncing back quickly from this ordeal,” Kling added. “Too many got burned too hard. It’s obvious now that the space has not done enough to identify and expel bad actors. We’re letting way too many sociopaths get way too powerful and then we all pay the price.” However, at the Treasury committee hearing, the crypto industry dismissed suggestions that much needed to change as a result of the FTX failure. “I think it would be very wrong to tar the entire industry, by this one bad apple, which happened to be a very big apple,” said Tim Grant, head of Europe, the Middle East and Africa at the crypto investors Galaxy Digital. “We’ve lost $77m at this point, which we don’t feel good about. “But primarily the users were institutional, and also the equity investors were among the most sophisticated and largest investors in the world. So there were a lot of very experienced eyes on this, and what it tells us is that this was a bad actor who was doing things behind very closed doors that we had no view into as a broader group. “That’s the same as Bernie Madoff and other instances like that, and they were in regulated industries.” The exchange’s collapse was precipitated by tweets from Changpeng Zhao, the head of Binance, the world’s largest crypto exchange. But Daniel Trinder, its vice-president of government affairs, insisted that the goal wasn’t to bring down a competitor. Zhao had tweeted he was selling some tokens that act as shares in FTX, but Trinder said the motivation was purely “because of the realisation that they were not worth the value”. While that announcement did kick off a process that ultimately brought down a competitor, “that certainly wasn’t the intent at all behind the trigger of the sale”. Trinder also pledged to provide the committee with internal documents detailing the conversations between Binance and FTX in the run-up to the former’s aborted rescue bid.