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With the recent collapse of FTX and troubles at Genesis coming to light, one begins to wonder are any crypto exchanges really safe? Of course we know that the best place to store tokens is in a self-custody cold wallet, or so I am told. I see ads constantly for new exchanges. Why would anyone switch to a new exchange at this time?
It's actually all beginning to make sense to me now. Whenever I see an offer to try out a new crypto exchange, there is always some lofty sign up bonus or grandiose promise of interest earned on staked crypto. After watching the collapse of FTX, I understand why these new exchanges have to make such offers to attract new users. It seems to me that essentially they need to do this to maintain liquidity. I'm not exactly a financial scholar or crypto expert by any means, but I do know a little. Any given crypto exchange needs activity to remain afloat, and needs its users to keep a certain amount of crypto on the exchanges to remain liquid and allow future trades to happen. This is a gross over simplification but, from my understanding, the basic building blocks of how an exchange works.
So now when I see a new exchange advertise, offering $1,000 bonus for the first $10,000 deposit you make, I have a newfound curiosity as to where that money for the bonus is actually coming from and what is the actual financial state of the exchange. Unless in exchange is publicly traded, like Coinbase, company financials aren't necessarily readily available to the public. They are aren't legally required to be. But of course public disclosure doesn't equate to healthy finances. Case and point: now bankrupt Voyager, which was once touted to me by a friend as a "super safe" exchange.
So I posed the question: what would it take for you to try a new crypto exchange? Or would you avoid any new platforms as of right now?
