FTX Collapse Saw At Least $20.7B Funds Leave Cryptocurrency Exchange Platforms: Report

At least $20.7 billion worth of crypto assets like Bitcoin, Ethereum and stablecoins reportedly exited top cryptocurrency exchange platforms between Nov. 2 and 13.

Cryptocurrency aggregator CoinGecko revealed in a report that "over $7.5 billion of the top six major cryptocurrencies had been withdrawn" from FTX since Nov. 2 by investors rushing to recover their funds.

The bulk of these withdrawals, according to the report, took place after Changpeng Zhao (CZ), the chief executive officer (CEO) and founder of Binance, the world's largest crypto exchange platform, announced that it would sell all of its FTX equity amounting to roughly $2.1 billion, citing "recent revelations that have come to light."

"As part of Binance's exit from FTX equity last year, Binance received roughly $2.1 billion USD equivalent in cash (BUSD and FTT). Due to recent revelations that have come to light, we have decided to liquidate any remaining FTT on our books," CZ noted in a Twitter thread.

In just three days, from Nov. 6 to 8, investors exited centralized exchange platforms and took with them more than $4.9 billion, the report also claimed. The exchange balances showed $123.6 billion on Nov. 2, but by Nov. 13, the platform's balances were down to $102.8 billion.

The report added that "within less than a fortnight, CEX balances of the top six major cryptocurrencies had fallen by approximately 16.8%."

According to CoinGecko, its study "looked at the two largest cryptocurrencies (BTC, ETH) and four largest stablecoins (USDT, USDC, BUSD, DAI) by market capitalization, and examined their balances on centralized cryptocurrency exchanges, including Binance, Coinbase and Kraken."

It all started on Nov. 2 when Coindesk released an article exposing the supposed leaked balance sheet of the trading firm Alameda Research. The report claimed that the trading firm was mainly reliant on FTT, the native crypto of its sister company FTX.

While the exposé triggered market jitters that saw a dip in the balances of crypto exchange platforms, it was brief and immediately rebounded. CZ's tweet, however, sent FTX investors into a tizzy. Investors scrambled to withdraw their funds, and a couple of days after, on Nov. 8, FTX paused withdrawals on its platform.

FTX then filed for bankruptcy on Nov. 11 along with its 134 affiliates. Sam Bankman-Fried resigned as the CEO of the company, and the FTX unraveling ensued.

As details about the once most trusted brand in crypto unfolded, Twitter users and even renowned crypto personalities on the microblogging platform started calling on investors and encouraging them to withdraw all their funds from centralized exchange platforms. The spectacular collapse of FTX did not only wipe investments but also taught retail investors to mistrust cryptocurrency exchange platforms.