Warning! FTX Collapses, Files for Bankruptcy
Our Take on the FTX Collapse
2022 brought some of the toughest times we’ve seen the crypto market endure. As expected, it has claimed a few victims. FTX may just be one of them.
Several large crypto exchanges have faced a liquidity crunch. Some have even frozen customers’ funds. FTX has gone the same way.
The crypto exchange froze withdrawals on 8th November 2022 as it scrambles for rescue funds. The drop in liquidity was triggered by a sharp increase in customer withdrawals.
Seeing this as an opportunity to acquire FTX, Binance jumped in a bid to rescue the sinking exchange. However, it backed out of the deal at the very last moment leaving FTX on the verge of collapse.
Binance backed out of the deal claiming irregularities in FTX books. It claimed that there were ‘mishandled customer funds and alleged US agency investigations’.
On top of that, Bahamian authorities have frozen FTX’s assets in the country while at the same time, founder Sam Bankman-Fried is facing an SEC probe. As the noose tightens around FTX, the collapse has already begun.
Thoughts for the Future
Only time will tell whether FTX gets buried in the dust or a last-moment effort can bring it back from the dead. Regardless, the collapse of one of the largest exchanges in the crypto world has sent shockwaves across the entire industry.
This is potentially a make-or-break for the crypto industry and a huge lesson for other exchanges.
Below you can read our original FTX review and what it would have been if it survived the 2022 recession.
Our FTX Review is going to be very different from most. We specialize in analyzing crypto exchanges and comparing the features they offer. You can expect this review to present a much more seasoned viewpoint, or how an expert trader would look at it.
FTX exchange deserves special mention because it has broken what the traditional crypto exchange model has been, and they have done it for the better! Today, it’s one of the fastest-growing and most well-established trading platforms out there.
FTX Exchange Review – At a Glance
FTX is a centralized crypto exchange that’s well-known in the crypto trading world for its advanced trading features. Along with margin and futures trading, the trading platform offers options, derivatives, and leveraged tokens. It’s a complete package for any trading enthusiast, no matter how advanced.
The exchange supports more than 300 cryptocurrencies, which is an incredible offering given the range of advanced trading features it has. FTX has quickly risen to compete with the giants of the industry including Binance, Coinbase, and Kraken.
It’s for the same reason FTX exchange found its way to our Top Cryptocurrency Exchanges list. Note that FTX global doesn’t work in the US. Traders in the US have to use the American version of the exchange, FTX.us.
FTX Review – Founders & Location
FTX exchange started back in the summer of 2019, providing users with a plethora of trading products. When it started offering crypto options, leveraged tokens, perpetual swaps, move contracts, prediction markets, and even Stocks, it was set up for something great.
Founded by Sam Bankman-Fried & Gary Wang who are the founders of Alameda Research Ltd, a leading quantitative trading and crypto liquidity provider. Incorporated in the Bahamas, FTX is known for its venture capital exploits and its close ties to the silicon valley money pool.
The 7 Keys of FTX Cryptocurrency Exchange
The 7 keys of FTX are as follows. Futures trading, FIAT, Leveraged Tokens, MOVE contracts, Prediction markets, Spot markets & now Stocks as well.
- Futures trading
- Leveraged Tokens
- MOVE Contracts
- Prediction Markets
- Spot Markets
The above gives them their Nefelibata status as “Cloud Walkers”. The FTX exchange earns this with all the options they give their traders. A wide selection of tradeable digital assets is very welcome indeed.
By combining all-in-one shopping this crypto exchange opened up more options to traders. Hence traditionally one would need several accounts of different brokers to trade all these digital assets, but you get that with the FTX exchange alone.
Noted in our FTX review is the FIAT Gateway. You get the option of not only stablecoins and other cryptos to deposit with, but also FIAT currency.
The above currencies can be deposited and withdrawn with FTX. Considering how long they have been around this is very impressive. Although considering all of their asset options, maybe this is just par for the course.
Along with popular cryptocurrencies for FTX you have again more interesting deposit/withdrawal options due to close relationships with Binance and related groups such as Bitmex.
- ETH (Ethereum)
- BCH (Bitcoin Cash)
- LTC (Litecoin)
- BNB (Binance Coin)
- BTMX (BitMax Token)
- TRYB (BiLira)
- USD Stablecoins (USDT, USDC, BUSD, PAX, TUSD, & HUSD)
Many Options with FTX Exchange
When you add up all the options available to you with FTX you can see the advantages. There are also big savings when you use the FTX token to trade. By using this token you can get discounted FTX trading fees.
The idea behind this is twofold. First, it attracts business by leveraging the token’s value. Second, the token’s value becomes an additional benefit. So people will want to use it as they do with the BNB token which we see has gone up by leaps and bounds.
We hope that the FTX token will have a similar trajectory in the future. Even at a fraction of the move of the BNB token, you could be looking at 5x and above returns on their token in the months to come.
Another key feature as we noted is the ability to trade stocks with FTX. This is a very cool feature giving users more options to trade. If you want to buy and hold Tesla on FTX, well you now can!
The ability to hold stocks or synthetic assets as they call them is a game-changer. It will change the space in the years to come. This is the real democratization of trading in crypto.
This is the dream crypto has to offer. Hence because of the blockchain nature of the space, we circumvent traditional regulations and bypass the old fintech/banking structures that are dead wood, by the money zombies who only wish to be paid, not to help advance humankind…
Prediction markets are a sore subject. Because of how they could be used in negative ways this is a dangerous element to add to the crypto exchange. Governments again may frown on this type of asset class. Be it perfectly fine for the libertarian ideals of the crypto elite. It won’t wash with DC IMO…
The more odd feature, which may be to some who I would classify as uber-nerds. Are the prediction markets, where the uber-nerds can trade their favorite and most popular prediction events? Not something I would be into, but at least you have this choice on FTX!
FTX Trading Fees and Misc Charges
Some of the more interesting things to note from this FTX review is their trading fees structure which is very time-consuming to try to figure out. They are for the most part simply put very much cheaper than most other exchanges as a whole.
FTX has no deposit/withdrawal fees, and there are no trading fees on futures settlements. If you trade from your wallet or use OTC trading, again all free outside of the quote prices.
They have tight spreads due mainly to their high liquidity and deep order book. From most exchanges, I would say you can save 10-20% over a Binance/Bitmex or similar crypto exchange if you watch carefully even more!
Using the FTX token you can save an additional few %s all the way up to over 50% on your trading fees if calculated correctly.
- 33% of all trading fees generated in FTX markets
- 10% of all the fees generated by their Socialized Gains/Insurance Fund
- 5% of fees earned from misc fees taken in by FTX
This is a nice cluster of saving that FTX offers its users. All you have to do is take advantage of the FTX Token and trading options.
KYC and the Tiers
With our FTX review, we want to note that they are very keen on KYC/AML policies. As most exchanges should be too. No need to run afoul of any government as long as the exchanges pay attention to the laws of the land.
FTX has tiers for their exchange. You have 1,2 & 3 Tiers. No KYC docs are required for limits of $9k a day. The only difference between Tier 2 and 3 is the latter offers unlimited fiat vs unlimited crypto withdrawals with Tier 2.
Trading Interface & Usability
The interface of FTX is not only simple to use but very intuitive as well. It is no-frills indeed, but most will appreciate this as well. Like other platforms, they have trading view charts built-in.
The look and feel of the FTX trading interface are fast and snappy. No time is wasted on unnecessary frivolities. Unlike most platforms where they shave time off order entry due to screen refresh delays.
Trade Gamestop on FTX for the Squeeze!
One of the fun things about FTX is the ability to buy stocks like GameStop (GME). If you have been under a rock you might not know that the heavily shorted GAMESTOP Corporation was recently hit by the Reddit short squeeze gang Reddit Bros “Wallstreetbets”. Reddit Bros have crushed Steve Cohen’s (Point72 Asset Management) & Dan Sundheim’s (D1 Capital Partners) out of Billions of dollars! LoL power to the people!
There is a lot to say about the Wallstreet bets people indeed and let us not get lost in the FTX message here. Trading Democracy #1. Because that is what it really stands for when you are able to do all of the neat features of DEFI in terms of speed/flexibility. No longer are we stuck waiting for a bank to settle or taking forever to get simple tasks done. The bank or brokers can go F themselves!
DEFI waits for no man…
DEFI waits for no one and plays by its own rules. Clearly, the FTX Review that we have here basically is lined up for the future of what our world can be. Simply put a better place of freedom and more fairness. It does come at a cost and that is knowledge.
Knowledge is the key to success in our future world of blockchain, as people will have to be smarter in order to thrive! There is no waiting or trying to get by with some half-baked schemes. You need to be smart!
Gamestop was a big favorite of mine buying it recently with a $55 average and a target above $200, all of which happened in a few weeks. Indeed, it was pure butter! Technically an easy trade for me to see with all the forces from heaven to hell involved in this silly drama, so much they even brought many of the players to testify before the U.S. government :/… Yeah, we have issues for sure!
Here is the thing though. If you wanted to trade Gamestop on FTX, well you could! So this was an amazing feat for us to achieve in the crypto space. Once again showing the advantages of blockchain.
With many other stocks such as Tesla, AAPL, and many others with a growing list at FTX. This for sure is a big advantage to using this broker. For instance, this is a chance for users to trade stocks, nice! A nice 4-5x trade all crypto traders normally look for.
FTX Review: Bottom Line
FTX quickly rose to compete among the best crypto exchanges on the market. Starting off in 2019, it only took the exchange a couple of years to build a name for itself.
However, the story of its collapse is a lesson for all new and old crypto exchanges out there. All exchanges and crypto projects should be backed with a solid store of value so they can live up to the challenge when it comes to testing times like these.
It seems as if FTX will not be able to recover from the mess it has gotten into. Time will tell whether they can make a comeback or head to the graveyard of crypto projects.