Less than a year ago, FTX was valued at $32 billion. But these days customers want their money back, and Sam Bankman-Fried’s cryptocurrency exchange cannot meet their requests.

A tentative bailout from rival Binance appears to be history, after this potential savior walked away from a rescue bid on Wednesday.

The world’s dominant crypto exchange inspected FTX’s books to learn what it’s buying. It appears that Bankman-Fried’s group has $6 billion greater liabilities than assets.

Of course, Binance withdrew from the deal, with customers pulling their funds soon after. Now FTX has paused withdrawals.

Such torment could put depositor funds at risk, and certainly spells a major setback for not only Bankman-Fried, but for the cryptocurrency industry as a whole.

Retail investors should be lucky to see at least some of their funds back in their wallets.

Even Galaxy Digital (GLXY), the crypto-focused financial-services firm run by Michael Novogratz, said on Wednesday that it has exposure of around $80 million of cash and digital assets tied to troubled crypto exchange FTX.

Any investors who used trades on FTX’s exchange to hedge positions held elsewhere may now have to liquidate those other holdings, creating a wave of selloffs, according to Reuters.

Bitcoin plunged to a 2-year low after FTX implosion; as did assets linked to Bankman-Fried and his hedge fund Alameda Research.

Regulation is, once again, front and center, as crypto exchanges are not subject of.

While banks must pay for deposit insurance and submit to regulatory oversight, crypto services act as lenders and brokers, also lacking in transparency.

Clients need to know that their funds are held safely in reserves, as Binance founder Changpeng Zhao himself said in a note to staff.

Although far from being a consolation, FTX crash may do some good after all. The industry could be more open, and crypto traders more discerning.

And what the market doesn’t correct, regulators will, even if many exchanges are hard to monitor since they are based outside of major developed economies.

Watchdogs managed to find out that Binance has processed Iranian transactions with a value of $8 billion since 2018 despite U.S. sanctions.

So now it’s even clearer that some kind of intervention is needed.