Key Insights
- The ripple effect from the collapse of FTX continues to spread across the crypto industry.
- One of the most prominent of these affected exchanges is Gemini.
- Many more are expected to release statements about their liquidity issues over the coming months.
Scams, hacks, and exploits are regular occurrences in crypto and stablecoin. However, the fall of FTX, one of the leading crypto exchanges in the world, proves that no one and nothing is 100% safe.
Genesis, a digital asset brokerage, announced last week that it would stop its lending services after learning that before the FTX crash, its derivatives venture had more than $170 million locked in an FTX trading account. This happened less than a week after the Sam Bankman-Fried-led crypto exchange filed for Chapter 11 bankruptcy.
Gemini, a cryptocurrency exchange owned by the Winklevoss brothers, announced that it was suspending withdrawals and new loan originations as it deals with the unusual wave of withdrawals following the fall of FTX.
In a sector where FTX was a key player, that is just one slice of the maze of connections, and many have speculated that more is on the way.
Stablecoins Exit Gemini and Major Exchanges
The ripple effect from the collapse of FTX continues to spread across the crypto industry. Although many deny exposure to the impact of the FTX crash, several exchanges and DeFi services are limiting user activity, suspending withdrawals, and failing to conduct business as usual.
Overall, many of these exchanges and DeFi services that initially denied their FTX involvement are starting to come clean about how deep a financial hole they are in. As a result, many more are expected to release statements about their liquidity issues over the coming months.
As mentioned earlier, Gemini is one of the most prominent of these affected exchanges. After halting their user withdrawals, they denied direct exposure to the FTX saga.
However, their halting of user withdrawals is a source of suspicion, and many investors started to pull their funds out.
There is a real possibility of the staking service on Gemini shutting down, as reported by CryptoQuant.
As illustrated above, more users continue to leave the platform, explaining the dip in its stablecoin reserves.
Hundreds of millions of dollars worth of stablecoins have left the Gemini reserves, and it is currently experiencing one of its worst withdrawal waves.
Another crypto analytics platform, Santiment, corroborated CryptoQuant’s findings with a tweet.
📊 Popular #stablecoins are moving off of exchanges, as the #crypto space continues to be filled with unprecedented #FUD. Our latest article explores the massive amount of $USDC and $BUSD moving into #selfcustody, & how this impacts future market movement. https://t.co/mmC3tyX7Bq pic.twitter.com/K6NL7FKgjW
— Santiment (@santimentfeed) November 16, 2022
Mass Exodus
According to the data shared by Santiment, popular stablecoins are starting to leave exchanges, and the crypto space continues to suffer from “FUD” (Fear Uncertainty and Doubt).
The tweet contains an article that details how money is starting to flow out of the crypto space as more investors begin to consider self-custody.
This will no doubt have a lasting effect on the crypto ecosystem as stablecoins are believed to be highly connected to the general health of the crypto market.
Overall, Santiment mentions in the article that indicators that if the market’s prices tried to rise again, it would be unsustainable because no new source of liquidity is flowing in to support the tokens.
Disclaimer: Voice of crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.
