FTX’s apparently slow withdrawal raises eyebrows

FTX’s apparently slow withdrawal raises eyebrows

Withdrawal transactions for customers using FTX, the third largest crypto exchange by volume, have apparently been limited to a nominal amount or none at all, according to multiple data sources in the chain.

Stablecoin withdrawals from FTX fell to zero around 6 a.m. ET Tuesday, according to data at CryptoQuant. Meanwhile, withdrawals of ether, Ethereum’s token, have been small over the same time frame, CryptoQuant data also showed. Etherscan data also revealed that FTX withdrawals are currently being made for up to 0.12, or around $170.79, of Ether.

“As FTX’s net holdings of crypto assets fell by 83% in the last two days, it appears that they are struggling to process withdrawals,” Ki Young Ju, CEO and co-founder of CryptoQuant, told TechCrunch. “For example, when their users exchange ETH for stablecoins and request a withdrawal, FTX must bring stablecoin liquidity to process the withdrawal via markets or other exchanges.”

FTX’s stablecoin reserve also fell by 93% in the past two weeks, and it has added USDC liquidity from Alameda Research wallets, Ju said. “This suspension of withdrawals appears to be a liquidity issue for user withdrawals.”

An FTX spokesperson did not respond to TechCrunch’s request for comment.

Some individuals in the crypto community tweeted that they “successfully retreated” ethereum and bitcoin from FTX, while others replied that they have been waiting hours to withdraw money.

Last night, FTX tweeted that the team has addressed the backlog of withdrawals and added that “the queue is shrinking and returning to more reasonable levels; nodes and banks catching up.”

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Since then, FTX and its CEO, Sam Bankman-Fried, have not released any statements regarding the hiatus at the time of publication.

The situation has come as FTX faces heat from the world’s largest crypto exchange, Binance, after its CEO, Changpeng “CZ” Zhao, tweeted that his exchange would slowly withdraw billions of its holdings in FTX’s native token, FTT.

On Monday, Bankman-Fried attempted to calm the waters regarding FTX’s liquidity via a series of tweets indirectly responding to Zhao and Binance’s liquidations.

“A competitor is trying to go after us with false rumors,” Bankman-Fried said. “FTX is good. Assets are fine.”

Bankman-Fried said FTX has enough to cover all client holdings and does not invest in client assets. He then tweeted he would “love” if Zhao and FTX could “work together for the ecosystem.”

FTT is currently trading at $14.65, down approx. 35%, according to data from CoinMarketCap.

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