In November, investors pulled nearly $1.5 billion in bitcoin from crypto exchanges.
The fallout of FTX’s collapse has rocked the crypto market, and November’s bitcoin outflows were the highest ever.
Bitcoin is down roughly 63% in 2022, tumbling from an all-time high of $69,000 in November 2021.
The implosion of FTX has led to a record amount of bitcoin outflows from cryptocurrency exchanges, as the episode rocks the digital asset sector and weakens confidence in centralized platforms.
According to a Monday Financial Times report citing data from CryptoCompare, investor withdrawals of bitcoin were the highest ever in November, with 91,363 tokens worth nearly $1.5 billion pulled from exchanges including Kraken, Coinbase, and Binance. It’s unclear whether those cryptocurrencies were sold or transferred to private wallets, the report said.
Meanwhile, in the first week of December, investors pulled 4,545 bitcoin from centralized exchanges, up from 3,846 in the same period in 2021.
Bitcoin has dropped roughly 63% year-to-date. It traded around $17,000 on Monday, after peaking at about $69,000 in November 2021.
Former FTX Group CEO Sam Bankman-Fried’s downfall has renewed concerns about the safety of user funds held in centralized exchanges. Global regulators are closing in on Bankman-Fried and FTX, and the once-touted crypto king is set to testify before Congress this week.
All this has weighed on public confidence in crypto, and traders have grown more wary over security.
John Ray III, who took over FTX and was responsible for taking Enron through bankruptcy after its stunning collapse, said FTX lacked basic risk management and accounting. Commentators have likened the FTX fiasco to crypto’s Lehman Brothers.
In a bid to both restore faith in the sector and distinguish themselves from FTX, competing exchanges have turned to so-called proof-of-reserves audits, a tactic meant to increase transparency and show customers their money hasn’t been loaned out.
Experts say the problem with proof-of-reserves, however, is that it’s more of a moment’s snapshot rather than a comprehensive overview of risks, and it can be misleading. The report doesn’t reveal in-and-out asset movements, nor does it list liabilities against assets.
“The industry needs to mature before it can recover, whether this comes from enhanced government policies on how to interact with crypto, or more sophisticated asset managers handling the movement of large sums of assets,” David Siemer, CEO of Wave Financial, previously told Insider. “It is abundantly clear that companies and platforms can no longer get away with hiding their reserves and keeping not only investors but also consumers in the dark.”
Read the original article on Business Insider
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