FTX Users Pull Millions Off the Exchange as Limited Withdrawals Resume

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FTX Users Pull Millions Off the Exchange as Limited Withdrawals Resume
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Millions of dollars worth of crypto assets have been pulled off the FTX cryptocurrency exchange in the past couple hours after the trading platform began processing withdrawals again, according to data from blockchain analytics firm Nansen.

FTX stopped processing withdrawals yesterday, citing liquidity issues. Withdrawals remained suspended as Binance backed out of a potential deal to acquire FTX. The exchange then resumed withdrawals today, but only for Bahamian customers, the company said on Twitter.

“Per our Bahamian HQ’s regulation and regulators, we have begun to facilitate withdrawals of Bahamian funds,” the company said. “As such, you may have seen some withdrawals processed by FTX recently as we complied with the regulators.”

The company said it’s actively investigating how to facilitate withdrawals for the rest of its users. The amount taken off the exchange peaked at $8 million around noon on Thursday, according to data from Nansen.

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Trouble started for FTX last week when a report surfaced showing that at least $5 billion of Alameda Research’s $14 billion balance sheet was in FTT, the utility token used to get discounts on trading fees on FTX’s crypto exchange. Both FTX and Alameda were founded and are owned by FTX CEO Sam Bankman-Fried, but he has always maintained that the two entities were separate. 

The news made Binance decide to liquidate its FTT, an unnamed source familiar with the matter told Decrypt. Over the following days, other investors liquidated their FTT positions and tanked the token’s price. The bank run created a liquidity crisis for FTX, at which point Binance announced that it intended to acquire its competitor on Tuesday. But the next day, the company backed out of the deal, saying FTX is “beyond our ability to help.”

This morning, CEO Sam Bankman-Fried said that the company is in talks with other parties to raise liquidity, but he did not announce that the exchange would allow users to withdraw their funds.

“So, right now, we’re spending the week doing everything we can to raise liquidity,” he wrote on Twitter Thursday morning. “I can’t make any promises about that. But I’m going to try. And give anything I have [too] if that will make it work.”

Some users were able to withdraw large amounts, including half a million worth of USDC sent to a wallet on Binance and $1.3 million USDC moved to an Ethereum wallet. It also looks as though $2.6 million worth of ETH was moved from the exchange and to a wallet that’s staking Ethereum.

Nansen data also showed that an Alameda Research wallet transferred $44 million worth of USDC. Labels on Etherscan show that it was an internal transaction, from one Alameda-owned wallet to another. On Thursday morning, Bankman-Fried announced that Alameda would be winding down.

Until the note about Bahama regulators, the main FTX Twitter account had most recently shared a message from Tron CEO Justin Sun saying, “we are putting together a solution together with FTX to initiate a pathway forward.”

Earlier this morning, he likened the effort to building Noah’s ark to help “FTX users weather the crypto storm.”

Meanwhile, Messari data shows that FTX saw $1.7 billion worth of volume in the past day, even though most FTX trading pairs stopped trading 6 hours ago.

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