FTX deposits: When can customers start withdrawing funds from SBF’s stricken crypto exchange?
Withdrawals from the FTX cryptocurrency exchange have been put on hold following a liquidity crisis.
New CEO and former Enron bankruptcy lawyer John Ray tweeted, via FTX lawyer Ryne Miller, that the company is in the process of removing trading and withdrawal functionality “and moving as many digital assets as can be identified to a new cold wallet custodian”.
He added: “Consistent with their obligations as Chapter 11 Debtors-in-Possession, FTX.US and FTX.com continue to make every effort to secure all assets, wherever located.”
Although there are no official figures as to how much creditors are owed, there are at least 100,000 and could be around one million people with money tied up in the exchange and its subsidairies, according to papers filed on 11 November, when the company applied for bankruptcy and its CEO, disgraced former billionaire Sam Bankman-Fried, resigned.
2/ Among other things, we are in the process of removing trading and withdrawal functionality and moving as many digital assets as can be identified to a new cold wallet custodian. As widely reported, unauthorized access to certain assets has occurred.
— Ryne Miller (@_Ryne_Miller) 12 November 2022
Fearful consumers have been cashing out of the exchange, a move that is partly responsible for FTX’s liquidity crisis – on 6 November, it saw $5bn worth of withdrawals.
On 11 November alone, more than $600m worth of funds were withdrawn by customers, according to analytics platform Nansen.
FTT to USD
Withdrawal backlog
FTX halted all its cryptocurrency withdrawals on 8 November 2022 after it ran into liquidity trouble.
This sparked concerns from FTX investors in the exchange’s official Telegram group, and some users revealed they had been waiting more than 24 hours for their withdrawals to be completed.
An admin of the official FTX Telegram group revealed that withdrawals had been halted and they would “start ramping up as soon as everything is ready on our end”.
The admin also said that those transactions currently processing are “part of the halt”. However, completed transactions should take the “regular 2-5 business days schedule”.
On 10 November 2022, the crypto analytics platform Arkham Intelligence discovered that FTX was beginning to process withdrawals “in a limited capacity”.
Meanwhile, Bankman-Fried said withdrawals from FTX.US, a separate company from the main exchange, would not be affected by the crisis.
The subsidiary has now filed for Chapter 11 bankruptcy, though its official Twitter account said on Friday (11 November) that while withdrawals of ETH and the ERC-20 version of MATIC from FTX.US had paused, they would resume soon. However, as of 16 November there were no further updates.
Binance’s U-turn
The collapse of the FTX token (FTT) – the native token of the FTX ecosystem – coupled with a surge in customer withdrawals initially fuelled the liquidity crisis for FTX. The exchange initially agreed on a rescue deal with Binance, which was later withdrawn.
On 8 November, when the Binance deal was announced, Bankman-Fried said that FTX was capable of covering all assets. He tweeted: “This is one of the main reasons we’ve asked Binance to come in... the important thing is that customers are protected.”
4) A *huge* thank you to CZ, Binance, and all of our supporters. This is a user-centric development that benefits the entire industry. CZ has done, and will continue to do, an incredible job of building out the global crypto ecosystem, and creating a freer economic world.
— SBF (@SBF_FTX) 8 November 2022
But the cancellation of this deal on 9 November threw FTX off course. In a Twitter thread on 10 November, Bankman-Fried said he would spend the week doing “everything we can to raise liquidity”.
4) FTX International currently has a total market value of assets/collateral higher than client deposits (moves with prices!).
— SBF (@SBF_FTX) 10 November 2022
But that's different from liquidity for delivery--as you can tell from the state of withdrawals. The liquidity varies widely, from very to very little.
He also said that funds were not a problem, as FTX had more in assets and collateral than held as customer deposits.
The following day, 11 November, Bankman-Fried announced that he was stepping down from his position at the exchange, and that the whole FTX group, including its US branch, was filing for bankruptcy.
In the press statement, FTX said it would begin “an orderly process to review and monetise assets for the benefit of all global shareholders”. But it did not reveal a timeline for these events, as the “new team is engaged only recently”.
Meanwhile, on 15 November, Bankman-Fried tweeted to say that he wanted to “do right” by the exchange’s customers, and that he was trying to get raise some funds to contribute liquidity for the exchange in order to do so.
He wrote: “Maybe I’ll fail. Maybe I won’t get anything more for customers than what’s already there. I’ve certainly failed before. You all know that now, all too well. But all I can do is to try. I’ve failed enough for the month. And part of me thinks I might get somewhere.”
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