FTX freezes withdrawals: What you can do if you’re affected
6 steps you can take to prepare for the fallout of FTX
On Wednesday FTX CEO Sam Bankman-Fried (SBF) announced plans to sell the FTX cryptocurrency exchange due to potential bankruptcy. Customer withdrawals have since been paused.
The exchange is currently unable to honour client deposits due to losses incurred by its sibling company Alameda, which operates a hedge fund. Alameda secured a large amount of debt against the FTX exchange token (FTT) which has lost ~90% of its value since Tuesday.
The treasuries of both companies appear to be intimately intertwined, and the failure of Alameda and FTT has revealed a reported $8 billion hole in FTXs balance sheet. FTX is now looking for a buyer in order to bail out its users, has frozen withdrawals and warns on its website that it "strongly advises against depositing" funds to the platform.
Even if FTX finds a buyer, users may lose a substantial portion or all of their funds, depending on the terms of the deal.
What you can do
To help those affected we have put together a list of actions that you can take to prepare for a bankruptcy or bailout event.
1. Record your balance
Crypto Tax Calculator has advised its users to download transaction records from FTX to have a record of any assets held on the platform. If you are unable to retrieve your assets from FTX, they could be filed as a capital loss at tax time. These records may also be relevant if you choose to pursue legal action, such as joining a class-action lawsuit.
2. Account details
Make sure to save any other relevant account details, such as your login details and a copy of your KYC approval if you received one. This may come in handy if you are required to prove account ownership later on.
Consider whitelisting FTX's associated email addresses to prevent any important communications from going to your junk mail.
You may be able to lodge a withdrawal request for funds, although understand that withdrawals are currently paused and funds may not be released any time soon, or at all.
There is a real risk that other cryptocurrency platforms will be affected by the fallout of FTX. You may want to consider moving your funds into a self-custodial wallet which means you have full control over your assets, not another company or person. This is a cornerstone of what makes cryptocurrency special and helps reduce counter-party risk. Learn about how to use a wallet here.
6. Professional help
- National Debt Helpline (1800 007 007): Speak to a financial counselor for free by calling the National Debt Helpline or visiting the website (www.ndh.org.au) which also has a chat service.
- Lifeline (13 11 14): Lifeline is a non-profit organisation that provides free, 24-hour telephone crisis support service in Australia.
The above tips should be considered as general guidance only and should not replace professional advice. Keep in mind that the situation is still unfolding and circumstances may change before the issue of user deposits is resolved. We will aim to update this article if new information comes to light that changes the situation for FTX users.
Best practices suggest moving funds into a self-custodial cryptocurrency wallet. This will give you full control over your funds and reduce counterparty risk. If you would prefer to keep your funds on an exchange instead, you can compare a list of exchanges here.
Disclosure: The author owns a range of cryptocurrencies at the time of writing.