Fearful cryptocurrency investors are pulling their funds in record numbers following the collapse of FTX.
That’s according to a Sunday (Dec. 11) report by The Wall Street Journal, which says investors withdrew 91,363 bitcoin, worth almost $1.5 billion, from exchanges including Binance, Kraken and Coinbase. It was the largest recorded bitcoin outflow, the report said.
The withdrawals come as bitcoin has fallen 64% this year. They’re also the latest example of the ongoing fallout from the collapse of FTX, which has become notorious for its apparent lack of internal controls.
Last week saw the Office of the Comptroller of the Currency (OCC) highlight crypto-assets as a “special topic” in its “Semiannual Risk Perspective for Fall 2022” report.
“This year’s dislocations in crypto markets and the associated failures of crypto firms have highlighted several key risks, which reinforce for banks and supervisors the importance of taking a careful and cautious approach to crypto activities and engagement with crypto-related firms,” OCC said.
For one thing, industry risk management practices are not mature, the report said, as the sector has been plagued by hacks, outages, fraud, scams and confusion over ownership rights, custody arrangements and financial representations.
“Most crypto market participants appear unprepared for the stresses and surprises that have taken place this year, resulting in substantial losses for millions of consumers,” OCC said.
Recent weeks have seen crypto firms take steps to reassure worried investors, as PYMNTS wrote last week.
Companies like Binance and Crypto.com have tapped outside auditors to provide proof of asset reports, which show the business has the assets to cover its liabilities.
In a recent interview with PYMNTS, Cornell University’s Saule T. Omarova said that one of the crucial failures in the FTX saga was the lack of “common sense internal controls,” as the company apparently tried to function with no chief financial officer. Its board of directors amounted to just three people, one of whom was ex-CEO Sam Bankman-Fried.