At the time of CZ’s tweet, there were nearly $1 billion in outflows from FTX, said Islam. Between Nov. 6 and when withdrawals were halted on Wednesday, more than $5 billion in additional withdrawals had occurred, with FTX unable to find the funds to process all the withdrawals.

Earlier this week, Binance signed a non-binding letter of intent to purchase FTX before beginning due diligence, but quickly claimed that FTX did not meet its requirements, citing concerns over servicing outstanding credit, said Islam. On Wednesday afternoon, Binance pulled out of the deal and FTX’s freefall began anew.

What Does It Mean
FTX International, the non-U.S. component of the company headquartered in Hong Kong, is still working to process customer withdrawals, said Islam, while yesterday the U.S. Securities and Exchange Commission froze the assets of FTX Digital Markets, the FTX parent firm.

In the near term, investment in the crypto and blockchain space is likely to slow down as people are more careful about taking risk, said Zheng.

“People are going to be even more so faced with the challenge of how to differentiate a good crypto company versus a not-so-good crypto company, and how to assess the vlaue of those companies,” he said.

As for investors with crypto on the FTX platforms, it's unclear who, if any, will be made whole.

Zheng believes that FTX’s collapse will trigger more risk-off posturing in digital assets, leading to the demise of many so-called “altcoins,” defined as anything non-bitcoin, and the increasing prevalence of the two largest cryptos, bitcoin and ethereum.

Islam, on the other hand, argues that several crypto projects like Avalanche and Solana have proven their utility as technology stacks upon which developers can build decentralized applications, and are likely to survive and thrive in the post-FTX environment.

Regulation
In an email yesterday, Nigel Greene, head of international RIA deVere Group, argued that digital assets need to be held to the same standards as the rest of the global financial system.

“They are here to stay—and the market is only set to grow,” he said. “There can be no doubt that regulation of the crypto ecosystem is required and, I believe, it should be a priority.”

Moving forward, crypto exchanges are likely to be required to show their balance sheet and proof of reserves to make sure customers are protected, said Islam.

“Regulatory agencies will clamp down onto exchanges because retail investors lost a significant amount of money," Islam said. "Now, cryptocurrency exchanges will have to fully comply with regulations. This means that they will have to show proof of reserves, audits, financial statements, and proof of transaction monitoring within their exchange. “