In case you have been living under a rock, or perhaps you just don’t read the news, in recent events, the 2nd or 3rd biggest crypto exchange FTX has filed for chapter 11 bankruptcy after having revealed it used customer funds to fund investments outside FTX.
And following a tweet from CEO of Binance CZ, wanting to liquidate all their current holdings of the FTX token FTT to the open market, it means the panic button was pressed, and users tried to withdraw as much as they could from the exchange, as FTT fell down to the bottom price wise.
And as customer assets were on loan to other entities, FTX didn’t have the liquidity to pay everyone, they stopped withdrawal requests, and everyone’s money was essentially stuck on the exchange with little to no hope of ever seeing their cryptocurrency again. There is a lot more to the story, but we brief it shortly here and we recommend you to definitely take a look at other sources to know the full story of what we know now, with Sam (Former CEO of FTX) and his outrageous tactics which lost real people billions of dollars.
You can thank Sam Fried for the recent crypto crash as well, all crypto saw around 15% downfall after more of the FTX story was revealed and users rushed to get their funds off the exchange.
Are crypto casinos impacted?
In most cases no, but as any crypto casino hold crypto pretty much 1:1 but there are some cases where a user would deposit X crypto but then win above the initial deposit, in these cases the casino may have to exchange crypto to match the user win. The casinos would never hold much funds on an exchange, but may send it there or hold a small amount of stablecoin which may be traded to the currency they need.
No casino has said anything about their losses with FTX or how it impacted their business but so far its safe to say majority of casinos have followed the right way of holding user’s crypto while they play at the casino, and never stored it on exchanges.
Funnily enough, at this point its probably safer to keep your crypto on crypto casinos, however casinos are not meant for safekeeping and will flag your account as you may need to wager the balance before being able to withdraw.
Not your keys, not your crypto
We see majority of casino users actually send their deposits from exchanges, and we cant stress it enough that we may see more of these cases in the future as the FTX story is not even closed to finished, and we have seen more companies such as Liquid exchange, or Blockfi file for bankruptcy as they held assets within FTX as well.
Buy a cold wallet, no matter what people say and even though you may hold FIAT at an exchange in the event that Tether or Circle’s USDC becomes de-pegged, its much better to store BTC or ETH in most cases on a cold wallet such as Trezor or Ledger.
In most cases USDC is said to be the most safe out of stablecoins, and even BUSD is backed by 1:1 USD dollars from PAXOS. So those are definitely the go to as many predict the most used USDT to de-peg at some point in an event of a crisis, and as they have not shown any form of audit, we recommend to stay away from it for now.
