FTX Appears to Have Stopped Processing Withdrawals, On-Chain Data Show
theblock.co
theblock.co
https://etherscan.io/address/0x7abe0ce388281d2acf297cb089cae...
FTX seems to be processing withdrawals normally. For the life of me, I can't understand why journalists love to speculate instead of doing a 5-second search on EtherScan.
However to me most articles about FTX seem like "panic first, research after". Yes SBF's investment company might be fucked, but customers funds should be totally separate from that.
We only have to look at the other crypto firms that have gone bust to know this space is rife with problems in that area - lies about FDIC protection, cryptocurrency and tokens considered part of company assets and subject to creditor claims, rather than customer deposits etc.
I wouldn’t like to rely on that “should”.
And you don't have to. Best always to hold your own coins yourself if you have that possibility, or use a custodian you trust.
That's the point. A lot of "trustworthy" crypto custodians have turned out to be… not.
“it’s fine, don’t worry about withdrawing and holding your coins yourself, your deposits are safe”
It appears that you actually agree with me that they may not be.
I assume most traders on ftx only put enough capital on the exchange to keep their positions open in the short term.
So the intangible value of ftx may well exceed the value of clients assets by a significant margin. Then ftx may well be able to issue new shares should it experience a liquidity crunch.
Are you sure? I come bearing no data at all, but it seems everything I listen to or watch is sponsored by FTX. Didn't they also go huge during Superbowl? I would think FTX is one of the largest marketing spenders in crypto purely based on optics (which, again, may be completely off).
Sure, and Tether "should be" one-to-one backed by US dollars.
In crypto, a lot of the time the "should be", isn't.
Crypto isn’t regulated so there is no segregation or protection of customer funds
Also see this: no FDIC insurance, letter from FDIC alleging misrepresentations from FTX: https://twitter.com/ClarityToast/status/1590022331220787201
Second one out, no problem.
Last one out, problem.
All? the accounts of FTX in the ethereum network.
Is this FTX changing their patterns for which accounts they use for withdrawals, and then this being interpreted as withdrawals being halted?
Upon further inspection, it actually looks like the only transactions they're processing are the ones from their own wallet. The entire TX history looks really suspicious to me.
E.g a very recent TX with some ETH going out: https://etherscan.io/tx/0x5a282187181907995b37c0df1888dfe364...
That being said, does FTX even allow custodial ERC20 transactions? I'd be surprised if they did.
Reading through the lines: FTX is in trouble and faces a "liquidity crunch", Binance might acquire them (But will do Due Dilligence first).
FTX US is not affected (SBF says funds are SAFU for FTX US, probably withdrawals are working for US but not FTX global)
Why would anyone trust this?
These products are built purely on trust. These things do not have any innate value. More than that, there is nobody that can be trusted that guarantees the value of it.
Now think about long term stability of something that has value built purely on sentiment and the sentiment changes over time in waves thanks to globalisation.
It is just a matter of time until people, for one reason or another, will get themselves into a spiral where the thing losing value will cause people to loose more trust, causing the value to drop. And there is nothing to stop it except large institutions that have power to manipulate market (if you remember Game Stop saga you know what I mean).
A normal, tangible thing like a company that is profitable and has some future will see ups and downs as the sentiment changes, but the shares will always have some value because not all investors are completely irrational and some investors can calculate the value and at some point will say "Fuck all those people selling it, I think they are all mistaken because I can actually calculate the value of it and the shares are now cheaper than they should be so I am buying".
This should be enough for the instrument to weather even very negative but temporary sentiment.
But this is not true for crypto. Crypto does not have innate value and when it goes crashing down it can easily crash to zero.
Over long time, without giant institutional investors propping it up constantly, it is guaranteed that it will happen at some point.
FTX has value because it has customers, growth, and most importantly: revenue.
If any one crypto goes bust then it shouldn't hurt FTX in the long run, unless they were leveraging that crypto to make unscrupulous bets. That very well could be happening via Alemeda.
So you may be right that this is destined to come crashing down, but it doesn't seem like the facts are proven yet
I am speaking about crypto in general.
From what I have seen a lot of companies popped up that are purely bound to crypto and so almost all of them will fall when crypto falls. Only very small minority have enough business footprint outside of crypto or will be able to pivot in time to avoid demise if it happens.
From CZ This afternoon, FTX asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-binding LOI, intending to fully acquire FTX.com and help cover the liquidity crunch. We will be conducting a full DD in the coming days.
Whose users are being protected here exactly?
Like all other financial institutions, they can process only certain amount of withdrawals in a time frame, limited by their banking partners and so on. Currently their are under enormous pressure, as their competitor Binance has decided to dump very large amount of $2B FTT token they received as part of the exit from FTX equity round where they were a seed investor. This will put FTT price under pressure and people correlate this price with the integrity of FTX. Also, FTX associated entities have loans collateralised by FTT tokens, so if the collateral value falls too much the loans are liquidated. Based on the FTX user agreement, this should not have effect on user deposits, but might have negative effects on other FTX associated entities like Alameda the quant trading desk.
The fear is causing everyone to withdraw from FTX and this has then clogged their withdrawal capacity.
Generally, if Binance would not have been hostile, they could have dumped their FTT tokens with less effect on the markets. They chose not to do so and telegraphed their dump very openly. This does not reflect well on the crypto industry as general. We will find out very soon.
Note that this kind of issues do not happen on decentralised exchanges (DEXes) where any reserves are transparent and smart contract controlled.
Yet, no communication from FTX or SBF.
this is the biggest issue. if they are having any kind of technical issues they should be on top of it.
even if everything is fine by tomorrow and withdrawals are working again, this radio silence is unprofessional and at this point it feels like they are trying to avoid saying anything that will be held up in court against them.
Listen to yourself.
If lot of people are withdrawing at once, it would cause minor inconvenience to any exchange. They have to transfer funds from cold storage, and that takes time. It is almost impossible to determine if an exchange is solvent or not until you know their cold storage addresses.
Even if you go to a bank branch, large withdrawals ($100k+) need to be announced days in advance, they will not give you the money on the spot.
Making matters worse, cryptocurrency is not a bank branch. Large transactions can happen on-chain without announcing anything to anyone, the bottleneck only hits once you try liquidating funds you don't own. Maybe you're right, and FTX has fallen on some bad times. Whatever the case may be, this is entirely their problem and one of many hundred issues that crop up when you create custodial crypto systems. I hope they continue to fail and remind everyone how P2P currency is meant to be distributed.
If business is going as usual, customers don't see anything, because hot wallet funds are kept at acceptable levels. Not too high, because you don't want to have too much funds online in a case a hack happens. Not too low, because you want customer withdrawals to function. However, if some kind of panic happens and people start withdrawing a lot at once, then you will always have delays, assuming that you have a sane system.
Exchanges simply don't work. The comparison between them and banks ignores the surrounding regulation and guarantees that banks are obligated to issue you. Are my FTX holdings FDIC insured?
It's not that simple. Operate enough against the user's and you'll find yourself indicted. Not being regulated doesn't mean it's a free for all and you can just take the money.
Hint: if it's more than 1 block (~10mins) you're either incompetent or fraudulent
Exchanges arose because pure P2P currency distribution is impractical. Crypto's assumptions about whether, how, and why currency should be decentralized are fundamentally at odds with human behavior.
This is closer to you writing a check and it bouncing not because you don't have enough money in your account but because your bank doesn't have enough money to settle the transaction.
Update, FTX is insolvent: https://twitter.com/cz_binance/status/1590013613586411520
I think this is a good thing. Companies overleveraging themselves like this _should_ be punished or at least have the risk of this happening hanging over them. FTX tried to create an infinite money machine, it didn't work. They aren't innocent victims here
Certainly CZ from Binance seems to have planned a squeeze on them.
vs ponzi scheme unravelling
The vast majority of finance people have been in the Matt Levine school of thought the entire time - the entire industry is a ponzi and every crypto person who thinks the way traditional finance does things is stupid will end up slowly replicating all the traditional finance structures and norms because it turns out they exist for a reason
I will say though: I think crypto is here to say, I think normal finance is here to say, they aren't incompatible. What I think was illogical was to suggest that blockchain was a substitute for very efficiently run operations (like custody)...but it could be used elsewhere (for example, having investment funds do transfers on a blockchain is interesting) because it is also true that other parts of the industry are pre-historic (anything retail-facing is usually expensive and poorly-run, the whole retail fund value chain is a joke).
Now all I have is a metal bin, how Ironic
<<Spoiler: there are none>>
There are plenty: https://etherscan.io/address/0x2faf487a4414fe77e2327f0bf4ae2...
The "Transactions" list on etherscan can be confusing as to the source and dest (check the individual Txns)
[Disclaimer: I'm one of the co-founders of MakerDojo]
However, notice how for the second time in a year an unexpected crypto entity (FTX/Alameda) is the actual one which is in difficulty. The first time being 3AC/Celsius.
In finance, when everybody knows something, it's 95% likely to be false.
Crypto scams/schemes and also legitimate crypto service providers also have another vulnerability: getting hacked or external influences (e.g. economic crises, legislation, sanctions or asset seizures) making their business model impossible to continue.
The problem is: it's sometimes very hard to determine if a crypto service is a scam, a pyramid scheme, a money-laundering operation or a legitimate service. And almost nothing of it (except certain NFTs which have legally bound real world entities tied to them such as [1]) is backed by actual real-world liquid-ish assets.
[1] https://www.entrepreneur.com/business-news/the-first-nft-hom...
If HN can spot scams so easily, how come there was no talk here about 3AC/Celsius and now FTX/Alameda being obvious scams.
My hackles go up when I see money suddenly appear from nowhere
"cant wait for my FTX airdrop for not moving any of my funds"
Possible interpretations range from (optimistic) a delay in pulling funds from cold storage due to unusually high levels of withdrawals to (pessimistic) FTX collapsing.
"But what’s so special about the FTX crypto derivatives exchange? What's the use case of the native FTT coin, and why is the project tipped as one to watch for the future?"
It is straight up paid advertising pretending to be "news". Infowars and Goop are closer to journalism than that link.