FTX is the leading centralized cryptocurrency exchange, specializing in derivate and leverage products. This was discovered by the Massachusetts Institute of Technology and Sam Bankman –Fried and Gary Wang in the year of 2018.
This had collected over one million users and this was the largest third-largest cryptocurrency platform.
They are headquartered in the Bahamas and Incorporated in Barbuda and Antigua. This is co-operated with FTX.US and provides a separate exchange for USA investors.
This has fulfilled bankruptcy protection in the United States in the year 2022 November.
FTX has also offered more than 300 cryptocurrency exchanges such as BTC/USDT, XRP/USDT, and ETH/USDT. Now, this platform has generated native token exchange as FTT/USDT.
This platform offers a wide range of cryptocurrency derivatives, spot trading, and innovative financial products.
It has gained more popularity due to its user-friendly interface, many trading options, and providing transparency and security.
They are producing session events that lead to the liquidity crisis. These events were for selling the products in their crypto market.
FTX remains the topic of interest in the community after the bankruptcy crisis.
✫ How does FTX work?
It is a cryptocurrency exchange platform that allows financial investors to sell, buy, and exchange cryptocurrency. This also offers many other services such as derivate trading, margin trading, and leveraged trading.
Before, we need to create an account and deposit funds. You can do work after completing these processes. Once you have added funds, you can trade the cryptocurrency.
They offer many cryptocurrency exchanges such as you can exchange the digital currency on this platform including Bitcoin, Ethereum, Dogecoin, Litecoin, etc.
They have also offered many other valuable trading options such as financial investors can trade in spot prices with borrowed funds. FTX has allowed derivate trading which means the financial investors can identify the future prices of the digital currencies.
✪ What was FTX’s business model?
This platform has collected much revenue from various sources such as trading fees, listing fees, margin interest, and derivate fees.
FTX spot market trading fees have included a range from 0.04% to 0.07% for financial traders based on the market model in September 2022.
Leverage tokens and redemption fees are calculated with a 0.10% charge. They take a 0.03% charge for daily management.
They did not take charges for the deposit and withdrawal of digital assets.
FTX US trading fees range from 0.05% to 0.02% for financial traders.
Non-fungible token (NFT) fees varied on trader location. For FTX US traders, it includes a $1 cost and a 2% charge to sellers for each trade.
Additionally, there is an overall 5% charge for foreign sellers and buyers on each trade.
✤ FTX Key Products
There have been some key products such as leverage tokens, spot markets, options, etc.
Leveraged tokens – They have generated ERC-20-based tokens. That helps the financial traders to take 3X leverages. For example, you have traded to exchange BTC/USD and applied 3X leverages, whether Bitcoin raise 10% from the time of purchase. The leverage token would have 30%. There is no margin required for leverage tokens.
Spot markets – They have offered more than 100 different cryptocurrencies for exchanges and providing unveiling to leading cryptocurrencies such as Bitcoin, Binance coin, XRP, and Ethereum.
FTX US has offered nearly 60 cryptocurrencies along with option contracts. It has also operated for non-fungible tokens (NFTs).
✣ What happened to FTX?
FTX collapsed due to a bankruptcy crisis in November 2022. This was the biggest issue for the worldwide crypto market.
After this happened, many financial traders came to know what exactly happened in the FTX crypto market.
Class-Action Lawsuit submitted the application in Florida federal court on 16th November. They allege that Sam Bankman–Fried made a fraudulent crypto-currency scheme. They have created this platform to take profit from unsophisticated financial investors.
In this fraudulent scheme, many celebrities named Come, who allegedly helped Sam Bankman–Fried to execute the plan.
Other crypto marketplaces such as Gemini crypto exchange have significant exposure to FTX and have been affected by the bankruptcy crisis.
Leading cryptocurrency investment bank Genesis has temporarily terminated redemptions and new loan facilities for financial investors due to the FTX collapse.
The Winklevoss twins discovered the Gemini crypto exchange. They have declared late withdrawals from the cryptocurrency exchange after this happened. Genesis is the leading partner with Gemini crypto exchange.
Crypto-leading platform BlockFi has also temporarily terminated the withdrawal process after this major crisis happened.
✦ Why did FTX collapse?
The reason for the FTX collapse was also the liquidity crisis. It means the company did not have enough budget to meet its obligations. The liquidity fall was caused by many factors.
FTX market has been significantly sell-off in the last quarter of 2022. This market has decreased the volume of trade. Therefore, the company got a reduction in revenue.
According to Alameda Research, over $150 million was stolen from this marketplace in November 2022.
After this happened, this marketplace stopped the withdrawal process among financial traders. This deforms the liquidity crisis and bankrupts.
FTX collapse was a major issue for cryptocurrency industries. That was one of the most respectful cryptocurrency exchange platforms among worldwide financial investors.
This collapse has raised concerns about the security of cryptocurrency exchanges.
FTX collapse had given negative impact on the crypto currency exchange market. This was a time when cryptocurrency had fallen.
It’s not easy to say how long the FTX collapse will be. However, many crypto markets have produced events to gain more popularity of crypto market among financial traders.
✡ What is the future of FTX?
It’s not easy to say what will be the future of this cryptocurrency exchange. This crypto market is currently working on bankruptcy proceedings and there’s no idea whether it will be recovered.
There are also possible solutions that this marketplace could be hired by another crypto marketplace and make plans to restructure the bankruptcy.
There could also possibility that could have simply disappeared.
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Conclusion
FTX was the leading centralized cryptocurrency exchange platform. This was the third-largest cryptocurrency exchange platform among worldwide finance traders.
Due to the collapse of bankruptcy and liquidity, this was an absolute fall among various traders. However, this is unclear whether it will recovered or not.