Backpack CEO advocates for mandatory withdrawal delays to enhance security

Armani Ferrante, founder and CEO of crypto exchange Backpack, wants the entire industry to pump the brakes. Literally.

Ferrante argued on July 15 that all crypto exchanges and protocols should enforce mandatory withdrawal delays, calling it a universal security upgrade with zero exceptions.

The case for slowing down

“You give me any custody system and it is immediately more secure with a withdrawal delay than without it. There are no exceptions.”

The logic is straightforward. When withdrawals happen instantly, a hacker who compromises keys or exploits a vulnerability can drain funds before anyone notices. Add a delay, even a short one, and you create a window for detection, intervention, and recovery.

Ferrante is essentially advocating for the end of instant settlement as a default feature.

The Ostium exploit: exhibit A

Ostium, an Arbitrum-based decentralized exchange, suffered an oracle exploit that drained approximately $18 million in USDC. That figure represented roughly 28% of the protocol’s total value locked, which sat at around $63 million.

The attack vector was a compromised oracle signer key. The attacker used it to manipulate future-dated prices, essentially feeding the protocol fake data to extract real money. Ostium halted trading temporarily while investigations began.

Ostium had previously raised about $27.8 million from investors including General Catalyst and Coinbase Ventures.

A mandatory withdrawal delay wouldn’t have prevented the oracle manipulation itself. But it could have given Ostium’s team time to detect the anomalous withdrawals and freeze them before the funds left the protocol entirely.

Backpack’s own approach

Ferrante isn’t just talking theory. Backpack has positioned itself as a transparency-first exchange, publishing daily proof-of-reserves attestations using zero-knowledge proofs. The idea is that users can verify their assets are actually held by the platform without revealing sensitive data.

This approach emerged from the wreckage of FTX, which collapsed after it became clear the exchange had been misusing customer funds for years. The FTX implosion exposed how little visibility users had into whether their deposits actually existed. Backpack’s ZK-proof attestations are designed to make that kind of fraud architecturally difficult.

Adding withdrawal delays fits neatly into that same philosophy. If you’re already committed to proving your reserves daily, adding a time buffer on outflows is a logical next step.

What this means for investors

For traders and investors, withdrawal delays are an easy litmus test. A platform willing to sacrifice some user convenience for better security is signaling that it prioritizes asset protection over growth metrics.

That said, mandatory withdrawal delays come with real trade-offs. In volatile markets, the inability to move funds instantly can mean missing liquidation deadlines or failing to rebalance positions in time. For institutional traders operating with tight risk parameters, even a short delay could be operationally significant.

Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.