Amidst the FTX drama, it is still unclear how the collapse of the world’s second largest crypto exchange will affect the industry. In addition to the many hedge funds that have already talked about their exposure to FTX and Alameda, several exchanges are currently in the limelight.
The crypto community is currently developing into the form of on-chain spies who want to know if and which crypto exchanges are mishandling their customer funds, doing business with them, and thus having sufficient reserves. Do not keep If it runs like a bank on FTX, they won’t be able to deal with it.
Binance CEO CZ warning A few days ago, “If an exchange has to transfer large amounts of crypto before or after displaying their wallet addresses, it is a clear sign of problems. Stay away.”
With this in mind, the crypto community is currently focused on three crypto exchanges. Glassnode’s Leading On-Chain Analyst As “Checkmate” ExplainedHuobi, gate(.)io, and crypto(.)com have been displaying “particularly strange BTC balance patterns” lately.
All three have major jumps, falls or oscillations on orders from 10k $BTC to $40k $BTC. The same can be said for the $ETH balance, the odd ‘I accidentally moved from crypto(.)com to get(.)io’ event.
Conversely, the analyst noted that BTC and ETH on Binance, Coinbase, Kraken, Gemini, Bitfinex and Bittrex “look quite vanilla” and did not trigger red flag warnings.
The rumors about the collapse of crypto(.)com are partly the exchange’s own fault. On-chain analysts found that crypto(.)com sent $500 million in ETH of users’ assets to gate(.)io “by accident” from their own accounts.
The exchange’s ETH and stablecoin reserves have been drastically reduced since the uncertainty developed. Cryptoquant CEO Ki Young-joo said that 25-80% of ETH reserves have been moved four times since September 2022. Stablecoins have fallen from $2.9B to $292M, -90% over the past 7 months.
ETH and stablecoins will continue https://t.co/FmNiPK88vZ ,
• Since September 2022, 25-80% of the ETH reserve has been moved four times.
— Ki Young Ju (@ki_young_ju) 14 November 2022
CEO Chris Marszalek was quick to answerClarifying that the ETH transfer was made in error three weeks ago, on October 21, while the funds were withdrawn to the cold wallet in the following days.
Yesterday, Marszalek assured that all withdrawals will be processed regularly. Reportedly, the withdrawal queue has dropped by 98% within the last 24 hours.
Evacuation is being done as usual. No FUD please.
— Chris | crypto.com (@kris) 14 November 2022
What about get(.)io and Huobi?
The mysterious transfer from crypto(.)com ironically happened on October 21, just before the release of Gate(.)io’s ‘proof-of-reserve’, which is why the exchange has also been targeted by the crypto community. .
The snapshot for the PoR audit reportedly took place as early as October 19. However, the report was not published until 28 October, which leaves critics suspicious.
The crypto community doesn’t even trust Hong Kong-listed Huobi. Exchange announced That $18.1 million in crypto could not be withdrawn on FTX, of which $13.2 million was customer funds. Later, Li Lin, the largest shareholder, announced that it would provide additional unsecured funding of up to $14 million, which would cover customer balances.
In addition, there seems to be an irregularity in Huobi’s balance. After Huobi published the asset snapshot, 10,000 ETH was transferred to Binance and OKEx deposit wallets. After this, only 4,044 ETH was left in Huobi’s empty ETH wallet.
The lead on-chain analyst at Glassnode discussed that all three exchanges show relatively active deposits from FTX, “usually after a major selloff.”
This is where Crypto.com shows 6-8% of its inflows from FTX in May and November 2021.
Furthermore, Huobi and Getio regularly sent around 5-8% of their entire BTC balances to FTX during the crash.
On the Ethereum front, all three exchanges saw large deposits of between 5% and 10% of their $ETH balances by 2022, with Huobi being the most different. After the June sell-off, FTX deposited 20% of Huobi ETH balance in one week!
According to Checkmate, it is worth mentioning that their inflows are huge compared to the balance of BTC and ETH.
At press time, BTC price was once again rejected at the $17,000 mark.