It is panic in the cryptocurrency world. After the fall of FTX, millions of investors withdraw their bitcoins from exchanges. Crypto.com is one of the exchanges hardest hit by this exodus.
The abrupt collapse of FTX has deeply undermined investor confidence in trading platforms. During the bankruptcy, it was actually revealed that Sam Bankman-Fried, CEO of FTX, was using his client money to fund his trading company, Alameda Research. This mismanagement of funds has caused the disappearance of over a billion dollars entrusted by FTX users.
Bitcoins leave the platforms and are not resold
Marked by the flash decline of the exchange, many investors have started to do so withdraw their cryptocurrencies exchange platforms in recent days. Mass withdrawals were noticed on the blockchain as early as November 7, 2022, at the genesis of one of the biggest crises in the industry.
It is especially bitcoin holders who have fled centralized services. Bitcoin withdrawals saw a sharp increase on Nov. 9, as Binance withdrew its takeover offer, according to blockchain analytics firm CryptoQuant. That day, more than 168,000 bitcoins has left the trading platforms. Same story from the owners of Ether, the cryptocurrency of the Ethereum blockchain. When Binance left FTX on the brink, over 1.3 million Ether left the platforms’ addresses.
As CryptoQuant points out, investors have created individual wallet addresses to hold their bitcoins. As cryptocurrencies left the exchanges, a multitude of blockchain addresses appeared. Glass knot, another blockchain company, agrees. In its reports, the company specifies that this strategy affects both small and large bitcoin holders. These are looking for the security of self-sufficiency”anticipates Glassnode.
” The platforms saw one of the biggest drops in overall BTC balance in history. This is comparable to just three periods in the past; April 2020 (Editor’s Note: The Covid-19 Crash)November 2020 and from June to July 2022 »points out Glassnode.
For CryptoQuant, this could be interpreted as ” the intention to hold Bitcoin… as part of a long-term investment perspective “. Despite the collapse of cryptocurrenciesit seems that the owners are willing to keep their bitcoins. These were not resold en masse for fiat currencies, such as the euro or the dollar. Investor confidence in Bitcoin remains intact.
At the same time, withdrawals of stablecoins, these tokens pegged to a fiat currency, have also increased. According to CryptoQuant, these are mainly BUSD withdrawals, the stablecoin of Binance, which has soared. This is a historic record.
Stablecoin withdrawal operations increase, purchasing power decreases
—CryptoQuant.com (@cryptoquant_com) November 15, 2022
Panic among Crypto.com customers
Some exchange platforms are particularly abandoned by their customers. This is the case with Crypto.com. After mistakenly sending $400 million worth of cryptocurrencies to an address on the Gate.io platform, the Singapore-based company has raised concerns among its customers. Also, Ki Young Ju, CEO of CryptoQuant, noted this the firm’s stablecoin reserves have shrunk by 90% in seven months. Crypto.com would have only $292 million left in stablecoins.
ETH and stablecoin reservation active https://t.co/FmNiPK88vZ :
• 25-80% of the ETH reserve has been moved four times since September 2022.
— Ki Young Ju (@ki_young_ju) November 14, 2022
Changpeng Zhao, the head of Binance, has made matters worse by repeatedly implying that depositing funds on Crypto.com is risky. During a space on Twitter, you openly hinted that your competitor is insolvent.
These factors have caused a panic movement similar to what FTX experienced a week earlier. Massive withdrawals from Crypto.com have been spotted on the net in recent days. On Twitter, many influencers advise their followers to leave the exchange as a precaution. For some internet users, Crypto.com would be in a similar situation to FTX. In this context, the price of the CRO token, issued by the exchange, stalled.
To stop the bleeding, Kris Marszalek, CEO of Crypto.com, taken to social media. It ensures that Crypto.com is functioning completely normally, despite numerous transfer requests. The company has no plans to freeze withdrawals.
“The pickup queue has decreased by 98% in the last 24 hours. Business is business as usual at Crypto.com. Kudos to our team for building a resilient blockchain infrastructure that performs normally under pressure”says Kris Marszalek.
Determined to put out the fire, Crypto.com released a list of addresses in its possession. This portfolio list represents onlypart of its reservesKris Marszalek points out. A more comprehensive treasury audit is currently underway by a third party. The analysis will be available soon.
The pickup queue has decreased by 98% in the last 24 hours.
It remains as usual a https://t.co/pFc4Pz9nFR.
Kudos to our team for building a resilient blockchain infrastructure that runs normally under load.
—Chris | Crypto.com (@kris) November 14, 2022
Who benefits from the exodus of cryptocurrencies?
As we can see on Twitter, some of the defectors repatriate their funds to cold room keys, like a ledger key. This tool allows you to secure cryptocurrencies stored on the blockchain. During the FTX crash, the French unicorn Ledger saw an influx of new users.
“After the FTX earthquake, there was a massive exodus from trading a security and self-sovereignty solutions. We are seeing heavy usage of our platforms and we ran into some scalability issues tonight”Charles Guillemet, Ledger’s chief of security, said Nov. 10.
This surge in customers has also resulted a brief server outage. Apparently, the number of new customers has remained strong for several days. On November 14th, Ledger’s support account is still mentioned ” greater interest » for branded products.
After the FTX earthquake, there is a massive outflow from trading to @ledger security and self-sovereignty solutions ✊
We are seeing heavy usage of our platforms and we had some scalability challenges tonight. It should be fixed now. https://t.co/a1Le91tNZF
—Charles Guillemet (@P3b7_) November 10, 2022
Same observation for its direct competitor, Trezar. The hardware wallet specialist says it has seen an explosion in sales, it reports CoinTelegraph. The brand points out that it is currently selling more keys than it did in November 2021, when Bitcoin broke its all-time high. The surge in demand started last week as the FTX crisis began.
“ We expect this trend to continue in the near to medium term as FTX failure is contagious. Bitcoin or cryptocurrency holders then lose trust in managers and finally start exploring their options to manage their digital assets themselves.says Trezor.