Regulators are circling FTX as rival exchanges try to reassure investors

Regulators are circling FTX as rival exchanges try to reassure investors

  • CEO says it will publish proof of reserves
  • Bitcoin stays around $16,700
  • Binance CEO Plans ‘Industry Recovery Fund’
  • Smaller exchange AAX stops withdrawals

NEW YORK, Nov 14 (Reuters) – Bitcoin and other cryptocurrencies were under pressure on Monday after last week’s spectacular collapse of crypto exchange FTX, as rival exchanges sought to reassure jittery investors of their own stability.

Kris Marszalek, chief executive of Singapore-based crypto exchange, dismissed suggestions it was in trouble, saying in a live stream on YouTube that the platform would prove naysayers wrong.

The “AMA (ask-me-anything)” session came after investors took to Twitter over the weekend to question an Oct. 21 transfer of $400 million in ether tokens to the exchange.

Marszalek tweeted on Sunday that the ether was recovered and returned to the exchange, but the Wall Street Journal reported that withdrawals on rose over the weekend.

An audited proof of the exchange’s reserves will be published within weeks, Marszalek said on Monday. The exchange did not engage in any “irresponsible lending products,” he added.

A spokesperson for did not respond to a request for comment on whether the platform’s outflows continued on Monday. is among the top 10 such exchanges by turnover globally, but less than FTX and market leader Binance. It made headlines in 2021 by signing a $700 million deal to rename the Staples Center in Los Angeles the Arena, and getting actor Matt Damon to promote the platform.

FTX filed for bankruptcy on Friday in one of the highest-profile crypto explosions after frantic traders pulled $6 billion from the platform in just 72 hours and rival exchange Binance abandoned a proposed bailout deal.

The cryptocurrency exchange’s collapse is being investigated by multiple agencies, including the U.S. attorney in Manhattan, a source with knowledge of the investigations said Monday.

LedgerX LLC, an FTX subsidiary, on Monday formally withdrew its request from last December with the US Commodity Futures Trading Commission to allow it to offer products that are not fully hedged.

FTX was engulfed in more chaos on Saturday after it said it had detected unauthorized access and analysts said hundreds of millions of dollars in assets had been moved from the platform under “suspicious circumstances”.

New FTX CEO John Ray said Saturday the company was working with law enforcement and regulators to mitigate the problem and was making “every effort” to secure assets. Former CEO and FTX founder Sam Bankman-Fried previously told Reuters that some of the transfers from FTX were the result of “confusing internal labeling.”

Another crypto exchange, Kraken, said on Twitter on Sunday that it had frozen the accounts of FTX, affiliated crypto trading firm Alameda Research, and their executives.

The FTX logo is seen at the entrance to the FTX Arena in Miami, Florida, U.S., November 12, 2022. REUTERS/Marco Bello

“We have been actively monitoring recent developments with the FTX estate, are in contact with law enforcement and have frozen the Kraken account assets of certain funds that we suspect are associated with ‘fraud, negligence or misconduct’ related to FTX,” said a spokesperson for Kraken. .

Bitcoin slipped back below $16,000 early Monday before recovering to $16,574, up 1.62% by 11:00 a.m. EST (1600 GMT). Still, down 18% so far in November, bitcoin is set for its biggest monthly percentage decline since June when the fallout from the failure of stablecoin TerraUSD rattled markets.

FTX’s token was worth just $1.3, down 94% in November, while’s Cronos token has halved in the past week to $0.06, according to pricing site Coingecko.


FTX’s collapse has unnerved investors amid unverified rumours, even as exchanges publish details of their reserves and promise further disclosures.

“One of the theories floating around is that exchanges are moving crypto around to shore up their balance sheets and make everything look good even when it’s anything but,” said Zennon Kapron, founder of fintech consultancy Kapronasia.

“It’s like somebody showing somebody a bank statement that you had $100 in your account at 2 p.m. this afternoon. At 1 p.m. it might have been $1 and somebody just transferred $99 to you, and at 4 p.m. you’re going to send it back . . . A snapshot tells very little about the actual health of a replacement.”

Separately, smaller Asia-based exchange AAX halted withdrawals over the weekend, citing failures at an unnamed third-party partner during a planned system update.

AAX said it hopes to resume normal operations within seven to 10 days, but in a message to clients said: “In light of the insolvency of one of our industry’s biggest players last week, crypto users are rightly concerned about the operational and financial stability of centralized exchanges of digital assets”.

Changpeng Zhao, CEO of Binance, the world’s largest crypto exchange, said he would look to create an industry recovery fund to help projects that were “otherwise strong but in a liquidity crisis.”

Binance last week signed a non-binding letter of intent to buy FTX’s non-US assets but later abandoned the deal, triggering its bankruptcy.

Zhao has since warned of a “cascading” crypto crisis.

Meanwhile, regulators continued to circle FTX, which itself had been a white knight for failed crypto projects last summer.

The Bahamas Securities Regulatory Authority and financial investigators are looking into potential wrongdoing due to FTX’s collapse, the Royal Bahamas Police Force said on Sunday.

Visa Inc ( VN ), the world’s largest payment processor, said on Sunday it was terminating its global credit card agreements with FTX.

Reporting by John McCrank in New York, Vidya Ranganathan in Singapore and Alun John in London; Additional reporting by Xinghui Kok in Singapore and Elizabeth Howcroft in London; Editing by Sam Holmes, Kirsten Donovan and Jonathan Oatis

Our standards: Thomson Reuters Trust Principles.

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