Cryptos dropped heavily on November 8, 2022, and the in-house token of major crypto exchange FTX lost at least 15% as investors seemed to take fright at talks of pressure on FTX’s financials.
Bitcoin, the largest crypto by market cap, lost up to 6% to trade at lows of $19,351, its lowest level in two weeks and seemed on course for its worst day since mid-September. Ether, the second-biggest crypto offloaded 5% of its value.
FTX has come under massive pressure after Changpeng Zhao, the head of rival exchange Binance, the biggest crypto exchange in the world, said on November 6 that his firm would liquidate its holdings of the FTX token citing some unspecified “recent revelations”.
FTX founder Sam Bankman-Fried insisted that the crypto exchange was ‘fine’ and that fears were “false rumours”. The company had no instant comment when contacted by reporters.
Nonetheless, the FTX token – which offers holders discounts on FTX trading fees – was last down nearly 20% at $17.73, its lowest value since early 2021.
Figures published by analytics firm Nansen revealed a one-day net outflow from FTX of nearly $630 million, indicating that account holders were also getting their money out.
24H total deposits to FTX: $540M
Total withdrawals: $1.2BNetflow: -$653M
Note: $ETH and ERC-20 tokens only pic.twitter.com/YbNjpFREy6
— Nansen 🧭 (@nansen_ai) November 8, 2022
The institutional, sales director at digital asset firm Amber Group, Justin d’Anethan, stated:
“With FTT headed south, below a major support level … (there are) massive withdrawals out of FTX, across multiple assets. It seems like investors are selling assets or withdrawing them out – probably will be a messy week.”
Cryptocurrency users had raised questions on Twitter in the past week about FTX’s token, following a report from a news website about a leaked balance sheet from Alameda Research, a trading company launched by Bankman-Fried that has close ties with FTX.
Reuters did not determine the accuracy of the report or the origin of the leaked balance sheet, but it appears to have somewhat rattled fragile market confidence.
Matthew Dibb, chief operating officer of Singapore-based cryptocurrency investment manager Stack Funds, said:
“On-chain analytics show hundreds of millions being withdrawn from FTX over the last day. The question of solvency of FTX has been raised given recent events this year … however we don’t see any hard data as yet that would confirm this type of view.”
