Reported delays in customer withdrawals did not help the jitters, as has done Binance’s announcement that it would liquidate all of its FTT. As Invezz covered earlier today, all the apprehensions are translating into more stablecoin withdrawals from FTX.
But Sam Bankman-Fried, the billionaire founder of the crypto exchange, says his company “is fine,” maintaining that recent claims about the financial books of Alameda is the work of a rival trying to bring FTX down.
In a tweet Monday, Bankman-Fried said:
“FTX has enough to cover all client holdings. We don’t invest client assets (even in treasuries). We have been processing all withdrawals, and will continue to be.”
No ‘LUNA’ repeat
As the FTX token falls under pressure with Binance’s liquidation of $500 million worth of the FTT token, the crypto market jitters that sparked stablecoin withdrawals from FTX are being driven by recollections of the Terra Luna’s collapse in May.
LUNA and its ecosystem was a $60 billion project and nobody saw the collapse coming until it was too late. Many observers agree chances of FTX falling into insolvency are low – even 0%, according to Larry Cermak, VP Research at The Block.
But as he notes, the market is “past acting in good faith,” in the wake of LUNA’s debacle. Cermak noted:
“The tough part is that it’s always sensible to withdraw, even if you think the rumors are like 1% likely to be true. So no shit there will be backlog and liquidity issues.”
According to Cermak, recent events have taught the crypto community to stay “safe rather than sorry,” with this the case whenever uncertainty and rumours begin to circulate.
Earlier, Binance CEO Changpeng Zhao had said his company’s move to liquidate FTT was a result of a lesson learnt from LUNA. He said Binance’s move is not a hit on a competitor.