Record volume of cryptos was withdrawn from crypto exchanges by Traders

Traders rush for exits alarmed at safety of their assets after FTX filed for bankruptcy

Sam Bankman-Fried admitted to poor internal controls at FTX © Bloomberg
Investors are pulling record levels of bitcoin from crypto exchanges as the collapse of Sam Bankman-Fried’s FTX stirs fears over the safety of their assets.

FTX, once the darling of the crypto industry, filed for bankruptcy protection in mid-November after an $8bn hole emerged in its balance sheet.

Last month investors pulled 91,363 bitcoin, worth a total of close to $1.5bn based on the November average price of around $16,400, from centralised exchanges including Binance, Kraken and Coinbase. That marked the largest bitcoin outflow on record, according to data from CryptoCompare.
It is unclear whether the coins are being sold or moved to private wallets.

The rush for the exit comes as the price of bitcoin has plunged 64 per cent this year and is currently trading around $17,000.

In the first seven days of December, 4,545 bitcoin were withdrawn from centralised exchanges, compared with inflows of 3,846 bitcoin in the same period last year, according to CryptoCompare.

In a sign of the detrimental impact of FTX’s collapse on its once-rival exchanges, credit rating agency Moody’s placed US-listed Coinbase’s bond rating on review for downgrade in late November, citing “the increasing likelihood of sustained declines in trading volumes and client engagement, two essential revenue drivers”.

“Falling crypto asset prices will restrict businesses’ ability to raise funds and depress customer demand,” Moody’s analysts wrote this week. They added that markedly lower crypto prices “will deteriorate the credit quality of centralised finance companies”.

“While the bitcoin sell-off decelerates, the damage has been done,” wrote Eric Robertsen, global head of research at Asia-focused bank Standard Chartered, this week.