Withdrawal transactions for customers using FTX, the third largest crypto exchange by volume, have seemingly been limited to a nominal amount or none at all, according to multiple on-chain data sources.
Stablecoin withdrawals from FTX dropped to zero around 6 a.m. ET on Tuesday, according to data on CryptoQuant. Meanwhile, withdrawals of ether, Ethereum’s token, have been small during the same time frame, CryptoQuant data also showed. Etherscan data also revealed that FTX withdrawals are currently executing for up to 0.12, or about $170.79, of ether.
“As FTX’s net crypto asset holdings decreased by 83% over the past two days, they seem to be struggling to process withdrawals,” Ki Young Ju, CEO and co-founder of CryptoQuant, said to nsemkeka. “For example, when their users exchange ETH for stablecoins and request withdrawals, FTX has to bring stablecoin liquidity to process the withdrawal via markets or other exchanges.”
FTX’s stablecoin reserve also decreased 93% over the past two weeks, and it has injected USDC liquidity from Alameda Research wallets, Ju said. “This suspension of withdrawals seems to be a liquidity problem for user withdrawals.”
A spokesperson from FTX did not reply to nsemkeka’s request for comment.
Some individuals in the crypto community tweeted that they “successfully withdrew” ethereum and bitcoin from FTX, while others replied that they have been waiting hours to withdraw funds.
Last night, FTX tweeted that its team has been processing the backlog of withdrawals and added that the “queue is decreasing and getting back to more reasonable levels; nodes and banks catching up.”
Since then, FTX and its CEO, Sam Bankman-Fried, have not released any statements regarding the pause, as of the time of publication.
The situation has transpired as FTX is facing heat from the world’s largest crypto exchange, Binance, after its CEO, Changpeng “CZ” Zhao, tweeted that his exchange would slowly withdraw billions of its holdings in FTX’s native token, FTT.
On Monday, Bankman-Fried tried to calm the waters in regard to FTX’s liquidity via a series of tweets indirectly responding to Zhao and Binance’s liquidations.
“A competitor is trying to go after us with false rumors,” Bankman-Fried said. “FTX is fine. Assets are fine.”
Bankman-Fried said FTX has enough to cover all client holdings and it doesn’t invest in client assets. He then tweeted he would “love” if Zhao and FTX could “work together for the ecosystem.”
FTT is currently trading at $14.65, down about 35%, according to data from CoinMarketCap.