FTX has been going downhill for a while now, and leading much of the crypto economy after itself. This has been one of the most significant events this year, at least for this part of the trading community. It marked a sharp decline in the value of the whole market, as well as some other curious consequences.
At the current point in time, FTX is nearing bankruptcy and under investigation for possible illicit activities. This isn’t a good sight – both for the company itself and for the crypto exchanges in general. Because of this story, a lot of people simply leave and go to Forex to conduct their trading.
What happened, in short
FTX, one of the big crypto exchanges in America (formerly) has been trying to make several questionable investments using the money of their users, essentially. They failed, and it turned out the company didn’t have much in the way of supporting itself financially. Much of their equity was in the form of their own token, the FTT.
It didn’t help that Binance suddenly decided to buy much of the company’s operations outside of America. This gave FTX users a clear signal – their benefactor is failing, and it’s time to bail. Many did, which encouraged panic first in the exchange itself, and then throughout the market.
This led to Bitcoin, Ethereum and a number of other cryptocurrencies losing a lot of their value. BTC in particular shrank by 25%, although it started to recover quickly enough. Because of this stunt, the currency lost over 65% of its starting value this year. The crypto economy suffered a lot from this overall situation, especially after a significant rally that seemingly ended the long financial winter for these products.
What does it mean?
FTX has currently lost the trust of its users, crashed the market and allegedly did something criminal with the finances entrusted to them. This has ramifications. Obviously, the customers of this company suffered the most, but the problems are larger than that.
The incident made it clear that regular users can’t trust crypto companies as they did before. Trading for beginners has become particularly dangerous, considering that it’s now clear that many people use the funds of their clients as they please and can block people from withdrawing funds at any moment (as FTX did).
Several other companies, such as AAX recently, reinforce this view. Some companies that also suffered decline in cash flow restricted the transfers of cash from their networks, just as FTX did. In other cases, exchanges came under scrutiny from users who noticed the symptoms of what FTX was doing. Crypto.com is one of the most prominent such cases at the moment.
It also encouraged the trust into non-exchange methods of keeping crypto, such as hardware wallets. It seems that a lot of people are now fed up with crypto exchange, although there aren’t many alternatives to them. It might be that companies will now try to win that trust back, and some improvements could happen.
It won’t be easy, but there are still plenty of brokers that hold the interests of their users to a high esteem, even though they obviously work for profit. Finding a proper exchange is a right challenge even outside of the current circumstances, but there are several trusted and regulated FX brokers you can go to.