FTX is Bankrupt But You Can Still Trade Crypto There

Why would FTX let a little thing like bankruptcy stop hundreds of millions of dollars in spot bitcoin and derivatives trade?

article-image

share

Bankrupt FTX continues to allow crypto trade despite customers’ inability to withdraw funds. As of 3 pm ET, trading on both the FTX.com website and the FTX mobile app are functioning normally.

According to FTX’s website, there has been over $200 million in volume of spot bitcoin traded over the past 24-hours.

Among FTX futures markets, which offer up to 20 times leverage, the site still registers upwards of $300 million in volume for both bitcoin and ether perpetual contracts.

Volumes are steadily declining across the board following the bankruptcy filings of the complex web of companies that make up Sam Bankman-Fried’s dizzying corporate structure.

Crypto trackers CoinGecko, CoinMarketCap and Messari have all scrubbed FTX from their volume rankings, but the platform’s markets remain fully functional, begging the obvious question: 

Why? What’s the point of trading on an exchange you can’t exit from?

Still 23,400 BTC ($388 million) open interest on FTX.

One reason could be the loophole in Bahamas regulations that allowed local accounts to continue withdrawing, a fact that is being exploited in a variety of ways by users prepared to risk legal trouble.

For instance, using FTX’s NFT marketplace, users are able to set up self-dealing auctions of otherwise low-value NFTs, then withdraw the proceeds as USDT stablecoins via Bahamas-based user accounts.

NFTs with no utility — and therefore no expectation of secondary market value — have suddenly seen millions of dollars in sales.

Loading Tweet..

FTX users would need to preserve trade data

There are good reasons for the website and user accounts to remain accessible — at least for a while.

Customers of FTX need records of their holdings and activity, both for tax reporting purposes and to participate in any asset recovery process in bankruptcy.

Loading Tweet..

While this may be possible even in the event the website itself is shut down, it’s obviously easier for users to use the account tools made available to them by the FTX front end, and numerous industry watchers have been recommending users do just that.

But trading?

Update 7:27am ET: Blockworks advises caution when interacting with any FTX domain or app. Since this article was published, FTX has opened an investigation into what it describes as several “unauthorized transactions” from the exchange’s crypto wallets.


Get the day’s top crypto news and insights delivered to your email every evening. Subscribe to Blockworks’ free newsletter now.


Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can’t-miss tweets and more from Blockworks Research’s Daily Debrief.


Can’t wait? Get our news the fastest way possible. Join us on Telegram and follow us on Google News.


Tags

upcoming event

MON - WED, MARCH 18 - 20, 2024

Digital Asset Summit (DAS) is returning March 2024. This year’s event will be held in our nation’s capital, where industry leaders, policymakers, and institutional experts will come together to discuss the latest developments and challenges in the ever-evolving world of cryptocurrency. […]

upcoming event

MON - WED, SEPT. 11 - 13, 2023

2022 was a meme.Skeptics danced, believers believed.Eventually, newcomers turned away, drained of liquidity and hope.Now, the tide is shifting and it’s time to rebuild. Permissionless II is the brainchild of Blockworks and Bankless. It’s not just a conference, but a call […]

recent research

Cosmos Hub: ATOM Economic Zone

Research

Replicated Security, the Hub’s Validation-as-a-Service offering that went live in March, is the first step in bringing value accrual to ATOM stakers.

/

article-image

Kenya’s central bank doesn’t seem enamored by the idea of a CBDC but hasn’t slammed the door shut yet

article-image

Both Ethereum and Solana have enjoyed vibrant DeFi environments, but this has not yet been the case for Cosmos

article-image

As Japan takes important step forward on stablecoins, industry participants say, proposed US laws around such crypto assets remain in flux

article-image

Stablecoins offer global financial access and on-chain transactions without limitations, while FedNow falls short in terms of utility, global reach and inclusivity

article-image

Connext wants to make using layer-2s and layer-3s a seamless experience

article-image

GameStop has been dabbling in Web3 initiatives since at least January 2022