If the FTX case showed one thing, it’s that the adage “Not your keys, not your cryptos” is more apt than ever. As FTX users see their funds blocked, with little hope of recovering them, the panic is spreading to other services. Centralized exchanges have indeed experienced massive withdrawals from their users. Zoom in on the subject.
Massive withdrawals on exchange platforms
The trend is visible on all exchanges, with massive withdrawals that were triggered around November 7, when the beginnings of the FTX affair were felt. Since then, users continued to transfer their fundscontributing at the same time to the general panic.
According to data published by CryptoQuant, Bitcoin withdrawals from platforms peaked on November 9, with over 168,000 coins withdrawn. That corresponds to more than 2.6 billion dollarsas BTC price bottomed out:
BTC withdrawals exploded following the FTX affair
For Ether (ETH), the trend is the same. November 9, 1.3 million ETH were withdrawn from exchanges, which corresponded to a sum of 1.4 billion dollars. Part of the sums reported are of course from FTX, before withdrawals are blocked for users.
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Transparency, a tool to stop the bleeding?
What options do exchanges have to stop the bleeding? While the ecosystem is in the midst of a crisis, and waits to see if other large companies will be affected, regaining investor confidence is proving to be a challenge. As several commentators have pointed out, the downfall of FTX should serve one thing: make exchange operations more transparent.
Already, Binance has positioned itself as the spearhead of the movement, inviting other platforms to reveal their withdrawal addresses (and showing substantial reserves of more than 70 billion dollars). All the major exchanges have also issued a press release, saying they have no liquidity problem.
🔴 LIVE – Follow the FTX deal in real time
But can the community believe them, when Sam Bankman-Fried denied any liquidity problems a few days before the fall of FTX? It will take hard data to reverse the trend. The proof of reserve systems used in particular by Kraken and soon Binance seem to be a means of proving the reliability of the exchanges.
All that remains is to regain the trust of the ecosystem will definitely take a long time. Without counting on the waves of regulations which should follow, while the institutions have already begun to look into the matter. The fall of FTX is therefore only the beginning of a period of great uncertainty.
👉 Also Read – FTX Employee Speaks Out: “Many Employees Lost Lifetime Savings”
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Source: CryptoQuant
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Journalist at Cryptoast, I fell into the pot of cryptocurrencies a few years ago. I am passionate about the innovative technologies that stem from the blockchain and I like to find the most crispy information to share with you.
Marine Debelloir
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