Binance, the world’s largest cryptocurrency exchange, as well as smaller competitors including Crypto.com, OKX and Derebit, have pledged to publish proof that they hold sufficient reserves to match their obligations to customers. Coinbase, the US-listed exchange, has also sought to distance itself from the crisis engulfing FTX, the digital asset space founded by Bankman-Fried. The sudden collapse last week of FTX and Bankman-Fried’s Alameda Research trading house, once considered pillars of the industry, has severely eroded confidence in the digital asset market. FTX had less than $1 billion in readily marketable assets against $9 billion in liabilities before it filed for bankruptcy on Friday, the Financial Times reported on Saturday. Tether’s namesake stablecoin – the industry’s largest – has seen about $3 billion in buyouts over the past four days, according to data provider CoinMarketCap, underscoring how traders are driving capital out of the digital asset market. Meanwhile, balances of ether, the second-largest cryptocurrency, have fallen 7 percent in the past fortnight to 22.9 million on major crypto exchanges, including FTX, according to data from blockchain analytics platform Nansen. At current exchange rates, this represents a drop of around $2 billion, which suggests that some investors are pulling their coins from central locations to store them using their own systems. Binance’s CEO warned last week of the possibility of a “back-to-back” crisis in the cryptocurrency space after the failure of FTX, which he said could resemble the global financial crisis of 2008. FTX had been valued at 32 billion after striking deals with big-name investors and building a public profile through a series of sports sponsorships, such as securing naming rights for the Miami Heat’s arena. Coinbase sent an email to customers on Friday, seen by the FT, outlining “how Coinbase’s business is different and ultimately better protects” customers’ accounts and assets. The email referred to the company’s financial position and said the exchange, led by CEO Brian Armstrong, holds clients’ assets on a one-to-one basis. Coinbase declined to comment beyond a blog post it made last week. Trading venues have also sought to distance themselves from what’s left of FTX after the group said it was investigating abnormal trading. Elliptic, a blockchain forensics firm, said on Saturday that there were indications that $477 million in cryptocurrency had been removed from FTX late Friday night. Recommended Kraken, a crypto trading platform, froze a handful of accounts belonging to FTX Group, its sister trading firm Alameda Research and their executives on Sunday after speaking with law enforcement officials. “These accounts have been frozen to protect their creditors,” the company said on Twitter, adding that other Kraken customers were not affected. The Bahamas market regulator also said it “has not directed, authorized or recommended to FTX Digital Markets Ltd the prioritization of withdrawals for Bahamian clients”. FTX, which is based in the island nation, said after suspending customer withdrawals last week that it would allow the redemption of Bahamian funds “in accordance with the regulation and regulatory authorities of the Bahamas headquarters.” The Royal Bahamas Police Force said in a statement on Sunday: “In light of the collapse of FTX Worldwide and the provisional liquidation of FTX Digital Markets Ltd, a team of financial investigators from the Financial Crimes Investigation Branch is working closely with the Bahamas Securities and Exchange Commission to to investigate whether any criminal conduct occurred.” Binance, meanwhile, suspended FTT deposits, a token issued by FTX to protect users. “We have noticed a suspicious movement of a large amount of $FTT by the token’s contract developers,” the exchange said on Sunday, offering suggestions on how to keep their digital assets safe.
