220,000+ BTC Withdrawn from Exchanges in Week After FTX’s Collapse
Investors have withdrawn 220K bitcoins from crypto exchanges in the week after the fall of FTX, according to data by Coinglass. The demise of Sam Bankman-Fried’s $32 billion crypto empire has affected not only crypto prices but seemingly investors’ confidence in centralized exchanges (CEX).
220K Bitcoins Pulled Out From Exchanges in 10 Days
Coinglass data shows that investors have extracted 220,000 bitcoins (BTC) from crypto exchanges since the collapse of FTX. Bitcoin balance on exchanges has plummeted from around 2.11 million on Nov. 7 to 1.89 million on Nov. 18.
The company’s implosion sent shockwaves through the entire crypto industry, pushing crypto prices and shares of crypto-related companies to new lows. While many compared FTX’s collapse to the crash of Terra and LUNA earlier this year, some say that the full contagion impact of the crypto exchange’s fall is yet to show.
Rumors about FTX’s woes emerged at the start of the month when it was reported that the majority of assets on the balance sheet of Alameda Research – a crypto trading firm founded by FTX founder and CEO Sam Bankman-Fried – were tied to FTX’s native token, FTT. The reports led to uncertainty among investors, triggering a sell-off that deteriorated even further after Binance said it will sell all of its FTT holdings.
All of this resulted in a liquidity crunch at FTX, with the bitcoin balance at FTX plummeting to just 1 BTC on Nov. 8, according to Coinglass. Shortly afterward, Binance signed a non-binding agreement to buy FTX in a bailout deal, though it wasn’t completed as Binance decided to walk away from the move.
FTX, as well as 130 other related companies including Alameda and FTX US, filed for bankruptcy last week. A few days later, the New York Times conducted an interview with Bankman-Fried, who voiced his regrets regarding the FTX. The report also revealed that FTX lent around $10 billion to Alameda to help it cover liabilities.
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FTX – The Latest CEX Casualty
Once considered one of the biggest crypto exchanges in the world, FTX collapsed in a matter of days, marking one of the worst-ever events for the crypto industry. In addition to affecting thousands of investors, many think that the collapse will also leave a lasting impact on investors’ trust in centralized crypto exchanges.
Because of the current volatility and unpredictability surrounding crypto assets, investors who are holding their funds on a crypto exchange may be unable to liquidate their holdings in case of a sudden crypto price drop. This can make it very difficult for users to retrieve their crypto funds, which is also the case with FTX.
FTX is the latest centralized platform that crumbled in 2022 following Celsius Network, Voyager Digital, and BlockFi. This is in contrast to decentralized exchanges (DEX), which even though they have experienced sell-offs, continue to operate at a high level.
Do you think the fall of centralized exchanges this year could have a positive impact on the DEX market? Let us know in the comments below.