It’s 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 most affected by this exodus.
The abrupt collapse of FTX has deeply undermined investor confidence in trading platforms. During the bankruptcy, it was indeed revealed that Sam Bankman-Fried, CEO of FTX, was using his clientele’s money to finance his trading company, Alameda Research. This mismanagement of funds has caused the disappearance of more than a billion dollars entrusted by FTX users.
Read also: leader Binance has a plan to save the cryptocurrency industry
Bitcoins leave platforms and are not resold
Marked by the flash drop in the exchange, many investors began to withdraw their cryptocurrency exchange platforms in recent days. Massive 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 in particular the holders of bitcoins who have fled from the centralized services. According to blockchain analytics firm CryptoQuant, bitcoin withdrawals saw a sharp spike on November 9, when Binance withdrew its buyout offer. That day, more than 168,000 bitcoins left the exchange platforms. Same story on the side of 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 exchanges, a multitude of blockchain addresses appeared. Glassnode, another blockchain company, agrees. In its reports, the company specifies that this strategy concerns both small and large bitcoin holders. These are looking for the security of self-sufficiency”advances Glassnode.
” The platforms have seen one of the largest declines in overall BTC balance in history. This is comparable to only 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 “ an intention to hold Bitcoin…as part of a long-term investment perspective “. Despite the crypto crash, it seems holders are willing to keep their bitcoins. These were not massively resold for fiat currencies, such as the euro or the dollar. Investor faith 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 mostly BUSD withdrawals, Binance’s stablecoin, which have soared. This is a historic record.
Stablecoin Withdrawal Transactions Increase, Purchasing Power Decreases
— CryptoQuant.com (@cryptoquant_com) November 15, 2022
Panic among Crypto.com customers
Some exchange platforms are particularly deserted by their customers. This is the case with Crypto.com. After mistakenly sending $400 million in cryptocurrencies to an address on the Gate.io platform, the Singapore-based company has raised concerns among its customers. Additionally, Ki Young Ju, the CEO of CryptoQuant, noticed that the company’s stablecoin reserves have shrunk by 90% in seven months. Crypto.com would only have $292 million in stablecoins left.
ETH & stablecoins reserve on https://t.co/FmNiPK88vZ:
• 25-80% of ETH reserve moved four times since Sep 2022.
• Stablecoins reserve decreased from $2.9B to $292M, -90% over the past 7 months.https://t.co/sljiJZbXuv pic.twitter.com/UiVw0a0Nmw
— Ki Young Ju (@ki_young_ju) November 14, 2022
Changpeng Zhao, the boss of Binance, has made matters worse by repeatedly insinuating that depositing funds on Crypto.com is risky. During a Space on Twitter, he openly implied that his competitor is insolvent.
These factors caused a movement of panic analogous to that experienced by FTX a week earlier. In recent days, massive withdrawals from Crypto.com have been spotted on the network. On Twitter, many influencers recommend that their followers leave the exchange as a precaution. For some Internet users, Crypto.com would be in a situation similar to that of 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, took to social media. He assures that Crypto.com is operating completely normally, despite numerous transfer requests. The company has no plans to freeze withdrawals.
“The withdrawal 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 – functioning normally under pressure”says Kris Marszalek.
Determined to extinguish the fire, Crypto.com has published a list of addresses in its possession. This list of wallets represents onlypart of its reserves, emphasizes Kris Marszalek. A more comprehensive treasury audit is currently underway by a third party. The analysis will be available in the near future.
The withdrawal queue is down 98% within the last 24 hours.
It remains business as usual at https://t.co/pFc4Pz9nFR.
Kudos to our team who built resilient blockchain infrastructure — operating normally under load.
— Chris | Crypto.com (@kris) November 14, 2022
Who benefits from the cryptocurrency exodus?
As we can see on Twitter, some of the deserters repatriate their funds to cold storage keys, like a Ledger key. This tool makes it possible to secure cryptocurrencies stored on the blockchain. During the FTX collapse, the French unicorn Ledger saw an influx of new users.
“After the FTX earthquake, there was a massive exodus from exchanges to security and self-sovereignty solutions. We are seeing heavy usage of our platforms and have encountered some scalability issues tonight”declared Charles Guillemet, head of security at Ledger, as of November 10.
This wave of customers even resulted in a brief server outage. Apparently, the number of new customers remained strong for several days. On November 14, Ledger’s support account still mentioned ” increased interest » for branded products.
After the FTX earthquake, there’s a massive outflow from exchanges to @ledger security and self-sovereignty solutions ✊
We see a massive usage of our platforms and had a few scalability challenges this night. It should be resolved now. https://t.co/a1Le91tNZF
—Charles Guillemet (@P3b7_) November 10, 2022
Same observation for its direct competitor, Trezor. The hardware wallet specialist claims to have recorded an explosion in sales, reports CoinTelegraph. The brand points out that it is selling more keys at the moment than in November 2021, when Bitcoin broke its all-time high. The surge in demand started last week at the onset of the FTX crisis.
“ We expect this trend to continue in the short to medium term as the failure of FTX is contagious. Bitcoin or cryptocurrency holders then lose trust in managers and finally begin to explore their options to manage their digital assets themselves.says Trezor.