Tron Providing Support to FTX Users with Tron Tokens Trapped on Platform
Withdrawals are once again trickling out of FTX, but only for certain customers, according to Zane Tackett, FTX’s ex-head of institutional sales.
The mammoth crypto derivatives exchange, which poleaxed the market this week after suffering a crisis of confidence, is processing withdrawals solely for Bahamian accounts, Tackett said on Twitter.
“Per our Bahamian HQ’s regulation and regulators, we have begun to facilitate withdrawals of Bahamian funds,” Zackett said. “As such, you may have seen some withdrawals processed by FTX recently as we complied with the regulators.”
Small Fraction
He added that the amounts withdrawn by Bahamian users comprise “a small fraction” of the assets the exchange holds. “We are actively working on additional routes to enable withdrawals for the rest of our userbase,” Zackett said.
The move came as the Bahamas Securities Commission announced it had frozen the assets of FTX Digital Markets and appointed a provisional liquidator to oversee its assets.
[embedded content]
FTX also announced Thursday that it had finalized a deal to allow holders of TRX, BTT, JST, SUN, and HT to swap assets from FTX on a one-to-one basis to external wallets.
FTX said that $13M of Tron assets will be deployed to facilitate the first batch of swaps, adding that information regarding future swaps will be shared on a weekly basis. FTX will also suspend deposits for Tron tokens until the swaps are completed.
“Please note, these markets (TRX, BTT, JST, SUN, and HT) may experience high levels of volatility,” FTX said. “Please ensure you understand the details of this arrangement and any associated risks.”
Tron Tokens
Justin Sun, the founder of Tron, announced he would provide support to FTX users with Tron tokens trapped on the platform the day before.
Data from CoinGecko shows that the TRX token has ticked up 2.6% in the last 24 hours.
Meanwhile, Andrew Thurman of Nansen said that $6.7M worth of withdrawals from FTX were processed in a single hour after the announcement. “Withdrawals coming in hot, now lots of folks [are] getting out large sums,” he said.
Not surprisingly, the decision to let Bahamian-registered accounts make withdrawals raised suspicions FTX insiders were receiving privileged treatment. Many of FTX’s employees reportedly have significant holdings on the exchange.
FTX Insiders
“Mostly FTX insiders getting out first,” commented Jason Choi, a crypto influencer with 110,000 followers on Twitter.
“Not a great look,” added FriendlyBrigand, another crypto head.
Things started to unravel for FTX and its sister trading firm, Alameda Research, after Coindesk reported on Nov. 2 that 40% of Alameda’s sheet comprised FTX’s FTT token, including $2.2B earmarked as collateral for some of its $7.4B in debts at the end June.
Focus Turns to Alameda as Investors Fear Binance Deal Not the Answer for Stricken FTX
Evidence Emerges FTX Used FTT Token for $4B Bailout of Alameda in September
Blockchain sleuths also noticed that FTX’s reserves were depleting amid an increase in withdrawal requests, fueling speculation that the firms may not be in good health.
FTX’s reserves quickly began depleting as users sought to pull their funds from the platform, fuelling speculation FTX may not be solvent and driving accelerated withdrawal requests. On Nov. 6, FTX faced $5B in withdrawal requests, founder Sam Bankman-Fried confirmed on Thursday.
Backlog
The exchange announced it could no longer keep up with the backlog of withdrawals on Nov. 9, and revealed that Binance had signed a Letter of Intent to purchase the exchange. But with news of regulatory agencies investigating FTX and the exchange reportedly seeking a $9.4B bailout, Binance backed out of the deal.
On Nov. 9, The Defiant reported that evidence had emerged showing FTX transferred $4B worth of FTT to Alameda Research to plug holes in its trading book.
The on-chain data was unearthed by CoinMetrics showing unusual transfers of 4B worth of FTT between FTX and Alameda in the second quarter and September.Reuters reported it had seen communications between the firms confirming the $4B transfer was a loan secured by various assets including FTT tokens and Robinhood shares the next day.