Following the massive downfall of the world's second-largest cryptocurrency exchange, FTX, prominent figures in the cryptocurrency industry are informing asset holders to seek self-custody of their assets.
The collapse of FTX has caused ripple effects throughout the cryptocurrency market, the price of Bitcoin immediately saw a heavy hit, with the world's most valuable digital asset falling to the $15,000 range, a price that it hasn't been since November 2020. This massive decline in price came after confidence was completely lost in FTX as it was discovered the cryptocurrency exchange was mishandling users' funds.
The stake was further driven home for FTX users when it's now former CEO Sam Bankman-Fried (SBF) announced that the company has filed for bankruptcy. With the collapse of FTX came major concern about the stability of other cryptocurrency exchanges such as Binance, Kraken, and the many more that are out there holding thousands of user funds.
Binance CEO Changpeng "CZ" Zhao recently took to Twitter to recommend users adopt a self-custody wallet, which gives users the ability to store all of their digital assets by moving them off the exchange they were purchased on. Zhao linked to a blog post he wrote two years ago on cryptocurrency safety and the benefits of self-custodial wallets.
Additionally, Michael Saylor recently touched on the importance of self-custody, saying that if you "can't self-custody your coin, there's no way to establish a decentralized network." The collapse of FTX and thousands of users having their funds held up in locked accounts has sparked new interest in self-custodial options and an overall panic of leaving any valuable assets on exchanges. On-chain analytics firm Glassnode recently reported that the number of Bitcoin withdrawals from centralized exchanges has reached a 17-month high of 3,424.315.
Furthermore, smart contract wallet Safe has reported more than $800 million in net flows since last Tuesday, approximately when the FTX plane crash began to really speed up. Hardware-based cryptocurrency wallet provider Ledger also reported a massive increase in the money being put into its system, with traffic getting that big, the company had to temporarily pause transactions due to scalability issues.
In other news, Binance CEO Changpeng "CZ" Zhao has discussed what Binance has in its reserves and has told users that the company will work toward more transparency.