Out of an abundance of caution, I recommend withdrawing any crypto-assets or fiat currencies held on FTX. Below, I explain why.
Key Takeaways
- Concerns over FTX and/or Alameda’s solvency have increased in recent days.
- For that reason alone, I recommend withdrawing all of your crypto-assets and/or fiat currencies from FTX as soon as possible.
- Hopefully, this becomes a non-event. But, just in case, it’s best to withdraw now to avoid a possible scenario where FTX halts withdrawals or, in an extreme turn of events, files for bankruptcy.
Why I’m Posting
In recent days, concerns over the health of Alameda and FTX’s balance sheets have increased. That reason alone should be impetus enough to withdraw all of your crypto-assets and/or fiat currencies held on FTX. (At least that’s what I’d be doing.)
I want to stress that this recommendation is precautionary. If you hold crypto-assets and/or fiat currencies on FTX, don’t panic.
I’d be very surprised if FTX halted withdrawals, and shocked if it and/or Alameda filed for bankruptcy. However, this is crypto after all—and it’s surprised me several times over the years.
So, I believe the sensible move is to take 5–10 minutes to withdraw your crypto-assets from FTX to your hardware wallet.
Don’t have a hardware wallet? Order one as soon as possible such as a Ledger Nano S, especially if you own what you consider to be a material amount. In the interim, I’d still recommend withdrawing to a hot wallet (e.g. MetaMask, Phantom) over keeping your holdings on FTX.
Read: How To Send Cryptocurrency To Hardware Wallets From Exchanges
Whilst FTX CEO Sam Bankman-Fried tweeted a couple of hours ago claiming that things were okay, it’s naive to believe this entirely. As a reminder, the founders of Terra, Three Arrows Capital (3AC) and Celsius similarly attempted to placate onlookers via Twitter in the days preceding their eventual demise.
How It Came to This
Conversations started late last week when CoinDesk reported that Alameda had $14.6 billion in assets as of Jun. 30. Its largest asset was $3.66 billion of “unlocked FTT” and its third-largest was $2.16 billion in “FTT collateral.”
(CoinDesk based the report on a private financial document that it reviewed. The question of who leaked it to CoinDesk is particularly juicy…a rival crypto exchange? An incumbent U.S. financial institution threatened by FTX’s ongoing efforts to expand into the U.S.? A concerned FTX or Alameda employee? Unfortunately, we’ll never know.)
Early this morning (AEDT), Binance CEO Changpeng Zhao (CZ) fueled the discussion by announcing that, “due to recent revelations,” the exchange would liquidate the remaining FTT it has held since Binance sold its equity in FTX last year. CZ said that Binance expects that it will “take a few months” to sell all of its FTT in a way that minimises market impact.
If the situation escalates significantly, I’ll post again as a would-be implosion of FTX and/or Alameda—depending on the details—may be just as significant as the collapses of Terra, 3AC and Celsius. For now, speculating on the impacts of this very unlikely scenario is a waste of energy and time, in my opinion. Best to wait and see how things unfold over the coming days.
With regards to FTT’s price, it has been particularly volatile over the past 12 hours. Personally, I’m not touching it. Too much uncertainty.
For those interested in monitoring the situation, I suggest this Twitter thread by Dylan LeClair. The first tweet of the thread is embedded below. Also, FTX’s stablecoin reserve—which is at a year-low and down 93% in the last fortnight—is one of the main metrics to monitor.