Coinlist users unable to withdraw funds – FTX contagion at play?

YEREVAN (CoincChapter.com) – According to crypto news reporter Colin Wu, the cryptocurrency crowdfunding platform Coinlist is unable to withdraw funds, possibly caught in the insolvency contagion raging through the crypto market after the infamous FTX demise.

Coinlist insolvent?

In detail, the FTX exchange and its sister company Alameda Research collapsed on Nov 8, taking down several affiliated companies, such as crypto lender Genesis. The wave resulted in a price slash across the digital asset sector and a contagion, which experts believe is far from over.

Other crypto news sources reiterated the fears, urging their followers to “GET OUT” and save their funds.

Wu also added that Coinlist has a multitude of custody partners, such as crypto lender Gemini and crypto bank Silvergate. Furthermore, Digital Asset Group (DCG), the parent company of Genesis and Grayscale, participated in Coinlist’s funding round.

The official reason is that the custody partner is undergoing maintenance, but it has lasted for more than a week. Coinlist incurs $35M loss in 3AC crash.

tweeted Wu.

Coinlist denies customer fund issues.

Despite the customer withdrawal issues, Coinlist denied any contagion effects on Nov 15. The company posted a lengthy thread, assuring the customers that their funds are safe on Coinlist and how their “business is different.”

Furthermore, the platform added that they hold user assets “dollar to dollar” and that Coinlist is ready to harbor any users that don’t feel their funds are safe elsewhere.

To address the elephant in the room, CoinList has no material exposure to FTX, FTT, Alameda or any credit exposure to any affiliate of FTX. We do not perform any actions with users’ funds unless explicitly authorized by the user.

said Coinlist on Nov 15.

The comment section exploded with replies from dissatisfied customers, who either couldn’t withdraw their funds or had trouble transferring in any direction.

Large partners dragged the platform down?

As Wu asserted in his tweet, Coinlist suffered a $35 million loss in the crash of Three Arrows Capital (3AC), once a popular crypto hedge fund. As CoinChapter reported in June, 3AC faced insolvency.

The firm failed to raise the $5 million margin call it needed against a $1 billion loan. The development came after sources close to the fund reported lenders had liquidated up to $400 million from the fund amid the Terra contagion.

Meanwhile, 3AC dragged down Genesis, a big lender to Coinlist partner Gemini, exacerbating fears about Coinlist’s affiliation with the company. Thus, the platform’s assurances of immunity to the contagion rang hollow in the customers’ ears.

In detail, FTX chief Sam Bankman-Fried also assured his customers that their funds were safe mere days before costing them billions of dollars. The tweet below was later deleted. However, it doesn’t take much time to notice the similar narrative in the phrase “we don’t invest client assets.”

Also read: Genesis on the verge of collapse – Grayscale Bitcoin Trust next?

While the customers seem panicked, Coinlist has not offered further comments on Twitter. The contagion on the crypto market is undeniable. However, it is not yet clear when the ripple effect from the FTX collapse will die down. For now, traders must choose where to keep their crypto funds safe and which platforms to avoid.

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