FTX Crash: What investors should know
FTX, a major cryptocurrency exchange, is on the brink of collapse this week amid liquidity concerns and allegations of misused funds, followed by a large volume of withdrawals from rattled investors. The value of FTX's native token, FTT, plummeted, taking other coins with it, including Ethereum and Bitcoin, which reached a two-year low as of Wednesday afternoon.
The impact of FTX's crash could have wide-reaching implications throughout the crypto market because cryptocurrencies and exchanges with exposure to FTT or FTX could face plummeting prices and financial troubles.
Here's what this week's events mean for major exchanges, U.S. investors and future crypto regulations.
What happened to FTX?
These are the key points:
FTX is a cryptocurrency exchange founded by CEO
What does this mean for
FTX's Bankman-Fried and Binance's Zhao emphasized that the liquidity issues concerned
However, on Thursday, FTX.US posted a warning on its website for users on the log-in screen, noting that trading "may be halted on FTX US in the next few days." The message told users to close any positions they wanted to and that withdrawals would remain open.
Bankman-Fried tweeted Thursday that the FTX.US exchange is "100% liquid," meaning users could fully withdraw all of their invested funds. However, Bloomberg reported that he told FTX.com investors Wednesday that without a bailout, the company would need to file for bankruptcy. It's unclear if this would include FTX.US.
What does this mean for the
FTX's troubles have had a profound effect on the
Bitcoin's price dipped below
Cryptocurrency is a relatively risky investment and should be treated accordingly. High-risk investments should make up a small part of your overall portfolio, and diversifying the range of cryptocurrencies you buy can help minimize risk.
I'm worried about keeping my crypto with an exchange. What should I do?
Consider moving your digital assets to a separate crypto wallet. Most exchanges allow you to transfer assets to these wallets, which can be online (on a separate platform) or offline (on a thumb drive with added security features).
» Need a wallet? Here are our top picks
Which exchanges are exposed to the FTX crisis?
With such high volatility and so many customers unable to withdraw their funds from FTX, investors are concerned about the fate of their assets on other exchanges. Here's what major exchanges said about their exposure to FTX and FTT:
FTX is under scrutiny from the
How will this affect crypto regulation?
Neither the author nor editor held positions in the aforementioned investments at the time of publication.
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