The cryptocurrency industry is in turmoil. Since the announcement of the bankruptcy of the giant FTX last Friday, more and more suspicious users have been trying to withdraw their cryptocurrencies placed on the exchange platforms. Bitcoin withdrawals hit a record high on Nov. 9 with more than “168,000” tokens withdrawn, according to data provided by firm CryptoQuant cited by BFM on Monday.
The failure of FTX has had repercussions on the entire cryptocurrency ecosystem. In a Nov. 13 press release, Hong Kong-based platform AAX announced the suspension of its withdrawals. To justify this decision, AAX has indicated that it wants to protect itself from “malicious attacks” during this “vulnerable period”. However, AAX users should be able to recover their funds within “7 to 10 days,” the company says. The BitCoke platform, also based in Hong Kong, has also suspended withdrawal requests from its users.
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The knock-on effect also seems to be spreading to Crypto.com, one of the world’s leading cryptocurrency exchanges. The latter tried Monday to reassure its investors after having to recover 400 million dollars transferred by mistake. Singapore-based Crypto.com has “a very strong balance sheet,” its CEO Kris Marszalek assured during a live stream.
However, this “mistake” has accentuated the distrust of investors already burnt by the failure of FTX. According to data from the specialized site Nomics, which analyzes real-time data on trades, Crypto.com’s daily volume plummeted from $5 billion a day last May to… 278 million in 24 hours on Monday.
Over 70% of Bitcoin buyers have lost money, according to one study
Crypto.com is in the eye of the storm
But Crypto.com’s problems don’t end there. According to the specialized site Wu Blockchain, the figures advanced by the platform would have many similarities with those of FTX before its defeat, in particular as regards the interest policy offered to users who leave their cryptocurrencies on the platform to make them grow.
Faced with the loss of investor confidence in trading platforms, Binance boss Changpeng Zhao appealed to other trading platforms, urging them to publicly publish their addresses and thus demonstrate transparency about the financial health of their business. According to the leader, the Binance company would have more than 71 billion dollars in assets at the current price of cryptocurrencies.
After the spectacular failure of FTX, even the small world of cryptocurrencies is preparing for a regulatory tightening. The fall of the cryptocurrency giant demonstrates that the sector must be subject to the same regulations as the traditional financial sector, because it carries the same risks, US central bank (Fed) vice president Lael Brainard said on Monday.
These markets “are very concentrated, very interconnected, and you see a domino effect. The failures of a platform or a company extend elsewhere,” the Fed’s number two said in a video interview with the Bloomberg agency taken over by Afp. “It reinforces, I think, this need to ensure that cryptofinance is included in the regulatory perimeter, because it is no different from traditional finance in the risks it exposes investors to,” he said.
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