i was also in confusion that if we all will try to withdraw funds will it not bankrupt it?
An exchange will go bankrupt whether you decide or not to withdraw your money, that is fractional reserve system for you. There is actually no money, and all you have in your "account" is just numbers, if they have used your money to do risky business and lose it, it is obvious that you will be unable to withdraw. People are advised to withdraw their money asap from these platforms because they would be able to process some withdrawals before completely suspending withdrawals due to being insolvent, so some people who get the advice early might be among the lucky ones to withdraw successfully.
There's a growing concern that CEX platforms, alongside regulatory challenges from the SEC, could potentially harm the crypto market. While many opt for CEX for various reasons, a scenario where investors suffer losses due to corruption could lead to an exodus from these platforms, resulting in market instability.
It is not going to harm the BTC network, that is for sure, BTC price may drop, but that is a great opportunity to buy more BTC's for a cheaper price. It is the shitcoins that will be affected the most, so many of them will collapse and fall out of the market, though the good thing about it all is that many people would learn about the importance of self custody.