FTX Community’s Worst Fear Comes True, FTX US Announces Pausing Withdrawals
On the 10th of November, FTX US officials announced that they may halt withdrawal service on their platform.
Many thought that the FTX US may take some time to do that but many users confirmed on November 11 that FTX US has already done that.
As the claims started to come in from the users’ end, the on-chain firms investigate the matter to confirm if FTX US had indeed acted promptly. They confirmed that the exchange had halted the withdrawals.
Initial Announcement on November 10
The announcement that the FTX US officials made on November 10 made it clear that the exchange would eventually pause withdrawals.
They even intimated the users to make sure they closed any positions they had opened at the FTX US exchange for trading purposes.
This indicated that the exchange had made the decision to actually pause the withdrawal access for the users.
The case is alarming for the FTX Users
The latest developments with FTX US have left most of the FTX community quite worried about their funds.
Initially, when the FTX crash took place on November 7, Sam Bankman-Fried provided multiple assurances to the community. He claimed that the FTX US exchange operated as a unique entity.
He went on to claim the FTX US was operating as a completely independent entity so there is nothing to be worried about. As per Bankman-Fried, there were no liquidity issues being faced by FTX US.
With FTX filing Chapter 11 bankruptcy and now FTX US announcing the halt on withdrawals, things have become clearer. Now it seems that Sam Bankman-Fried was trying to cover a major crisis with his words.
Unfortunately for US investors, FTX US is no longer allowing withdrawals. The exchange has even asked the investors to close out any of their positions opened for trading.
What Caused FTX to Crash?
After the balance sheet for FTX was leaked, it was revealed that the funds at Alameda Research were being backed by FTX’s funds. These funds did not belong to FTX, instead, they belonged to the customers.
The backup that Alameda Research was getting from FTX was for the FTX Tokens (FTT). Therefore, Binance announced that it would liquidate its entire holding in FTX.
According to Changpeng Zhao, Binance’s CEO, they did not want to repeat the same mistake as the Terra network.
Just as the announcement was made, people knew FTT’s price would plunge and the investors started to sell FTT like hotcakes. Soon, a great plunge was recorded in the trading price of FTT.
In a matter of 7-days, FTX’s trading price has plummeted 91.99%, bringing it down to $1.44. Things have not been better even in the past 24 hours, as FTT has plunged 6.23%.
As more updates keep coming in about FTX, FTT keeps losing its value.