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FTX stablecoin reserves plunge as community fears bankrun

7 Nov, 20224 min readAltcoins
FTX stablecoin reserves plunge as community fears bankrun

The crypto community fears FTX might cause another Terra-like crash after the stablecoin reserves on the exchange fell significantly over the last 24 hours.

FTX stablecoin outflow leads other exchanges

As reported by The Data Nerd, Nansen data shows that FTX stablecoin outflow was the highest among exchanges over the last seven days. According to the screenshot, FTX reserve is down $300 million, with its balance sitting at $261 million at the time of the tweet.

Another blockchain analytics firm corroborated the above. CryptoQuant data shows the FTX stablecoin reserve is currently at $107 million, an improvement given that it had plunged by 93% over the last two weeks to $51 million earlier.

#PeckShieldAlert ~68.3M stablecoins ($BUSD, $USDT, $USDC) has been transferred from Alameda Research to @FTX_Official from several sources (Circle, Paxos) within the last 4 hours — PeckShieldAlert (@PeckShieldAlert) November 7, 2022

The increased reserve was due to Alameda Research sending stablecoins from Circle and other exchanges to FTX. Alameda is a crypto trading company owned by FTX founder Sam Bankman-Fried.

According to Lookonchain, Alameda has withdrawn $487 million USDC from Circle and transferred it to the FTX exchange since Nov. 3. It also withdrew over $197 million USDC from Circle after CEO Caroline Ellison said that the trading company is willing to buy Binance’s FTT for $22 each.

Meanwhile, CryptoQuant data also shows that Ethereum withdrawals on FTX hit an all-time high. The current FTX reserve is 108,246.43 ETH, the lowest since November 2020.

Jump crypto, Nexo lead withdrawals

Chinese crypto reporter Colin Wu reported that firms like Jump crypto and Nexo had made substantial withdrawals from FTX over the last 24 hours.

According to Wu, Jump withdrew $40.4 million USDC from the SBF-led exchange. During the same period, Peckshield noted that crypto lending firm Nexo also withdrew over $90 million from FTX.

This wave of withdrawals has made FTX’s hot wallet value plunge to $1.8 billion from $2.4 billion in the last 24 hours, Lookonchain reported.

Influencers urge people to withdraw from FTX

Crypto influencer and founder of crypto banter Ran Neuner told his followers to withdraw their funds from FTX.

I have nothing against FTX but there is no upside to keeping funds on any exchange. More so on an exchange that has FUD.I’m almost sure FTX will be ok but in the tiny chance that they are not, I wouldn’t want to think that I had an opportunity to withdraw and didn’t take it! — Ran Neuner (@cryptomanran) November 7, 2022

According to Neuner, he has nothing against the exchange; however, “there is no upside to keeping funds on any exchange. More so on an exchange that has FUD.”

Several traders who have tried withdrawing from the exchange highlighted that they had experienced delays, with some revealing that they were charged exorbitant fees for their withdrawals to be processed.

FTX withdrawal fee just got 100x'd to $100 — Material Scientist (@Mtrl_Scientist) November 6, 2022

FTX is quite interesting.. 100usd withdrawal fee on USDC ERC20 withdrawal, 25usd withdrawal fee on BUSD BSC withdrawal. But meanwhile claiming they are financially healthy.. then why are you so afraid of capital outflow? and still trying to scam you customers…🫠🫠#FTX— SZ (@kingslucifer) November 6, 2022

Have been waiting close to 8 hours for BTC withdrawal from #FTXPretty significant delays since news of "insolvency" first broke out — min (@min17992010) November 6, 2022

Meanwhile, Ben Armstrong (BitBoy Crypto)said he “certainly urged people to close their FTX accounts, but not because they are insolvent.” He added that he does not believe the exchange will harm customers as it would be fine again when it completes its Voyager deal in December.

Everyone is waiting to hear me say, “I told you so!” about @FTX_Official being rumored to be insolvent.I’m actually not going to do that. I certainly urged people to close their FTX accounts, but not because they are insolvent.Do what you have to do to withdraw funds…1/2— Ben Armstrong (@Bitboy_Crypto) November 6, 2022

FTX insists all is well

Meanwhile, Bankman-Fried has insisted that all is well with the exchange.

3) We've already processed billions of dollars of deposits/withdrawals today; we'll keep going. (Taking up anti-spam checks to process more–sorry if you got those. We're hitting node rate capacity, will keep going.) Also tons of USD <> stablecoin conversions going on.— SBF (@SBF_FTX) November 6, 2022

According to a Twitter thread from the crypto billionaire, the exchange has “already processed billions of dollars of deposits/withdrawals today; we’ll keep going.” He added that the exchange would welcome users who withdrew their funds when all these blows over.

Oluwapelumi is a believer in the transformative power Bitcoin and the blockchain industry holds.

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