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Are FTX Funds Safe?

Are FTX Funds Safe?

Cryptocurrency & Blockchain

On Monday FTX’s CEO Sam Bankman-Fried wrote on his Twitter account:

“FTX has enough to cover all client holdings. We don’t invest client assets (even in Treasuries),”

However, now it appears that the FTX CEO or SBF as he is known by deleted that tweet. When you try and access it today you receive a:

“Sorry, that Tweet has been deleted.”

Yikes!!

FTX holds their customer accounts. As opposed to a dealer where customers have their own key to their crypto accounts. So if FTX goes down, customer funds could become depleted by losses. A scary thought for customers who range from gigantic sovereign wealth funds and retired elderly investors.

Hopefully, the Binance bailout will occur smoothly.

For further reading: Is Binance buying FTX?

The problem for FTX is that they have become subject to a proverbial “bank run” by their deposit holders. So just when they need capital reserves. The capital is taking flight. Over the last 48 hours, ethereum reserves apparently dropped 90%. The FTX token has also dropped by 90%. And apparently the token encompassed a huge portion of the balance sheet. Leaving a lot of debt, and far fewer assets.

FTX had claimed investor funds were not used as collateral for company investments. However, withdrawals have become halted.

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Are FTX Funds Safe?