FTX Reportedly Pulling Out Funds From DeFi Is Causing Volatility Across the Space
- Analysts are highlighting large withdrawals placed from FTX, which is causing volatility. They are pondering whether FTX might be having trouble with its reserves.
- These analysts also pointed to FTX pulling funds out of the Wormhole bridge, saying that these transactions are being made to ensure liquidity remains.
- FTX has taken a hit after Binance announced it would liquidate its FTT holdings. FTX CEO Sam Bankman-Fried calmed investors down by saying that the exchange had $1 billion in excess cash.
Analysts are taking note that FTX is pulling funds out from several DeFi protocols and exchanges, causing some volatility in the space. The conclusion some analysts are drawing is that FTX might be having trouble with its reserves. They speculate that the withdrawals are being used to honor FTX withdrawals.
#PeckShieldAlert Seems like FTX 0xC098B has removed Liquidity (1,985 $ETH valued at ~$3M) from Gearbox Protocol https://t.co/7PRW3QXoCr pic.twitter.com/uKyIMo8zoO
Researchers have also suggested that FTX might be pulling a lot of funds out of the Solana bridge Wormhole. A look at Alameda’s wallets suggests that these transactions are being made to secure liquidity requirements for FTX. Of course, none of this has been verified without any doubt. FTX, Alameda, and Wormhole have hundreds of wallets between them, and this analysis is time-consuming.
🚨A quick look at Alameda and all the ensuing volatility🚨
Searching for recent contract interactions, Alameda approved a couple tokens but also interacted with Clearpool — diving deeper, they repaid a milly in outstanding loans and also a $5 milly position on Aurora’s Bastion pic.twitter.com/0dXCmB2tEY
Andrew T of Nansen said that there was a major withdrawal on Gearbox where the user paid 20 ETH in withdrawal fees to withdraw 2,000 ETH. He added that this wasn’t labeled as FTX or Alameda. As an effect of these withdrawals, the DeFi space is experience skewed price movements. For instance, stablecoin Ethereum pairs on Uniswap show a whooping 55% APY. And the pool in question has more volume than TVL.
pic.twitter.com/CZLaqzvoNh
He went on to say that “Alameda’s troubles have spread to all of DeFi, and volatility is popping off.” Colin Wu also reported on this, saying that Alameda could be behind a massive outflow of stablecoins from the KuCoin exchange. Alameda, acting as a market marker for KuCoin, withdrawing funds will affect the liquidity of the exchange.
There has also been a massive outflow of Kucoin, and one view is that Alameda, acting as a market maker for Kucoin, is withdrawing funds from it. pic.twitter.com/kOm96QNWOw
Wu also showed that there was a large transfer of stablecoins from other exchanges, including Binance, OKX, Huobi, and Gate. These were sent to an FTX hot wallet.
Some users on Telegram have allegedly been complaining of issues relating to the withdrawal of funds on FTX. These withdrawals could have been spurred by recent events relating to FTX and Alameda. Others have said that FTX is selling SOL to keep the FTT token above $22.
I hear FTX is selling #SOL to maintain #FTT above $22.
As soon as SOL is moved, FTT pumps. Curious.
Anyone got more intel? 🧐 pic.twitter.com/PyJhNs4EK2
FTX at Center of Discussion Following Binance FTT Sale
The news comes following a major report by CoinDesk, which published details on Alameda’s balance sheet. According to the report, the company had $14.6 billion in assets and $8 billion in liabilities — mostly in the FTX token.
But perhaps of more significance is the fact that Binance would be liquidating its FTT holdings. CEO Changpeng Zhao cited “recent revelations that have come to light,” though he offered no detail on what these revelations were.
As part of Binance’s exit from FTX equity last year, Binance received roughly $2.1 billion USD equivalent in cash (BUSD and FTT). Due to recent revelations that have came to light, we have decided to liquidate any remaining FTT on our books. 1/4
FTX CEO Sam Bankman-Fried has denied the rumors that FTX is insolvent. This could partly be why there has been a flurry of activity in the ecosystem. Bankman-Fried addressed the Binance development by saying that a competitor was trying to go after the exchange with false rumors.
1) A competitor is trying to go after us with false rumors.
FTX is fine. Assets are fine.
Details:
Bankman-Fried tried to assuage users by saying that FTX had over $1 billion in excess cash and that users’ funds were safe. He said that the withdrawal issues implied that regulation difficulties and audits might have been slowing matters down.
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