The now-defunct FTX Trading Ltd., sometimes known as FTX (short for “Futures Exchange”), ran a cryptocurrency exchange and hedge fund in the past. Sam Bankman-Fried and Gary Wang started the exchange in 2019, and it peaked in July 2021 with over a million customers and was the third-largest cryptocurrency exchange by volume. FTX was founded in Antigua & Barbuda and has its headquarters in the Bahamas.
Cryptocurrency trading on the FTX platform
On the FTX platform, trading crypto is rather simple. A well-known cryptocurrency exchange called FTX provides a variety of trading alternatives, including spot trading, futures trading, and options trading. Here is a broad description of the cryptocurrency trading process on FTX:
Make a user account
You must register for an account on the exchange if you don’t already have one. Set up two-factor authentication (2FA) for security, provide the appropriate information, and go through any required verification procedures.
Invest money
You must deposit money into your FTX account before you can start trading cryptocurrencies. Numerous cryptocurrencies and fiat currencies are accepted for deposits on FTX. You may add money to your FTX account by transferring it from your wallet or another exchange.
Open the trading interface
Go to the trading interface on FTX after funding your account. Depending on your interests, you may pick between spot trading, futures trading, options trading, and other trading categories.
Select cryptocurrency
Choose the cryptocurrency pairings you wish to swap in the spot trading area. For instance, you’ll need to locate the BTC/ETH trading pair if you wish to trade Bitcoin (BTC) for Ethereum (ETH).
Make a purchase
Market orders, limit orders, and more complex order types are just a few of the order types that the exchange provides. While a market order is immediately executed at the current market price, a limit order allows you to specify an established cost for your trade execution.
Enter order specifics
If you’re creating a limit order, provide the price at which you’re prepared to trade as well as the quantity of the base cryptocurrency you want to swap.
Examine and affirm
Review your order information to make sure everything is accurate before concluding the deal. Verify the amount, price, and trade pair a second time.
Implement the trade
You may place the transaction after you are pleased with the order specifics. If you made a market order, it will execute right away after being processed. A limit order you make will be carried out when the market hits the price you set.
Observe and control
In the “Balances” area of your FTX account, you may keep track of the development of your holdings once the deal has been completed. To control your risk and possible gains, you may also create stop-loss and take-profit orders.
The fall of FTX
The price of Bitcoin began to fall sharply in late 2021 and early 2022 from its peak at the beginning of 2021, and other cryptocurrencies soon followed. Except for FTX, which continued to acquire rivals, many significant platforms began to shut down. The ascent of FTX, however, came to a stop in November 2022. CoinDesk reported that $5 billion worth of assets at Alameda Research, which was also created by Bankman-Fried, were significantly reliant on FTX’s digital token FTT. A leaked copy of FTX’s balance sheet revealed a lack of diversification and an excessive degree of ties between the two businesses. With $900 million in assets and $9 billion in liabilities, the balance sheet showed a deficit of $8 billion due to incorrectly labeled entries. Alameda obtained from FTX all the funding it needed. Later investigation revealed that the majority of this cash came from customer deposits and that the trading company often took out loans against the assets of FTX clients.
FTX’s demise
FTX fell in November 2022. The leaked balance sheet and the CoinDesk report set the scene. Due to the mismanaged money, Binance first said that it would sell every single one of its FTT tokens. Customers had to withdraw money from their accounts as a result of the sharp decline in the value of FTT. However, investors were concerned about their investments after the failure of other cryptocurrency platforms like Celsius Network and Voyager Digital. Billions of dollars were lost by FTX during this massive withdrawal. To get the money from the withdrawals, Bankman-Fried gave Alameda Research the order to liquidate assets. He also searched for funding to close the $8 billion shortfall between what was owed and what could be paid. On November 8, FTX removed the online option that allowed users to withdraw money from the site, preventing hundreds of thousands of users from accessing their money. The inability to cover the $8 billion shortfall led to FTX filing for bankruptcy.
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