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Thursday, August 18, 2022

FTX Review: Know and don’t get fooled

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What is FTX?

FTX Exchange is a leading central cryptocurrency exchange that specializes in leveraged and derivative products. The company was established in the year 2018, by MIT graduates and ex- Jane Street Capital international exchange-traded funds trader Sam Bankman-Fried. FTX offers a wide range of trading options that include derivatives and options, volatility products along with leveraged tokens. The company also offers market prices for spot markets that span over 100 trading pairs of cryptocurrency, such as BTC/USDT and ETH/USDT. FTT/USDT, and XRP, its native token FTT/USDT.

Bahamian-based FTX, as well as the FTX US affiliate, share the same management teams but different capital structures. U.S. residents can only trade via FTX US.

Key TAKEAWAYS

  • FTX is a central cryptocurrency exchange, specializing in leveraged and derivative products as well as derivatives. It can support most of the traded cryptocurrencies.
  • The primary products offered by FTX are Futures, leveraged tokens MOVE contracts, options, and spot markets.
  • FTX is located in the Bahamas and is not able to serve U.S. residents, who are able to trade with FTX US.
  • FTX, as well as FTX US, have been merged with each other with similar management teams, but with distinct capital structures.

The basics of FTX Exchange

The wide variety of FTX’s products and simple-to-use desktop and mobile trading apps attract investors of all levels, from novices to experts with years of experience or, in the language of crypto the whales, from beginners to whales. The FTX platform provides a wide assortment of different types of orders including basic market orders, to more intricate stop orders with trailing.

FTX’s competitive spot and futures fee ranged between 0.04 percent to 0.07 percent for market takers based on the maker-taker model at the time of June 2022. In addition, leveraged tokens incurred the creation and redemption fees of 0.10 percent and a daily management charge of 0.03 percent.

FTX offers nine fiat currencies that investors can transfer and deposit using wire transfers: the U.S. dollar, euro, British pound, Australian dollar, Hong Kong dollar, Canadian dollar, Swiss franc, Brazilian real as well as the Argentinian peso.

FTX does not charge withdrawal or deposit fees for the majority of cryptocurrency assets. Bitcoin withdrawals of greater than 0.01 bitcoin are free, as is a withdrawal that is less than 0.01 bitcoins per day. Small bitcoin withdrawals will be subject to an additional 0.1 percent fee.

Fiat currency withdrawals of greater than $5,000 USD will be granted for free and only one weekly withdrawal lower than that amount.

FTX US trading fees for market takers varied between 0.05 percent to 0.2 percent at the time in June 2022. NFT or non-fungible token (NFT) costs are $3 for listing an NFT by using the self-service tool and 2% of the cost to the seller on every sale or trade. Fiat currency deposits are made through wire transfer ACH and debit/credit card as well as Silvergate Exchange Network, all of which (except for credit and debit cards) are able to withdraw fiat currencies. Wire transfer withdrawals that exceed $5000 USD are unrestricted. A withdrawal every week less than the threshold is also free, however, the subsequent wires are subject to the cost of $25.

There are no deposit charges for blockchain transfers. FTX US pays the withdrawal blockchain fees for all tokens, with the exception of ERC20/ETH, and bitcoin withdrawals of a small amount.

FTX US customers must prove their identities in order to gain full access to the bank under know you customers (KYC) regulations. KYC Tier 1 customers are restricted only to one deposit of $2999, ACH deposits of $500 in any 10-day rolling period, and a lifetime limit on withdrawals of $300,000. KYC Tier 2 customers are restricted to one-time deposits of $20,000 and ACH deposits up to $30,000 for a 10-day rolling period They are not restricted to lifetime or daily withdrawal limits.

Key Products

The primary products offered by FTX are the leveraged token, futures, MOVE, options, and market prices in the spot market.

Futures: Traders can place both short and long bets on top cryptocurrency markets with over 100 perpetual and quarterly futures pairs that have margins up to 101x. Stablecoins like USD and Tether (USDT) are utilized as collateral for opening and maintaining positions.

Leveraged Tokens: FTX offers tokens based on ERC20 which offer traders 3x leveraged exposure in relation to the trading pair in question. For example when a trader purchases a BULL/USD-3x length Bitcoin token. If Bitcoin rises by 10% within 10 days of purchase the leveraged token will gain 30 percent. The leveraged tokens of FTX have no minimum margin requirement.

Options: Traders may speculate on the direction that prices will take in the future and hedge their open positions using the option of calling and put options, which allow the holder to exercise the right, but no obligation to purchase or trade at a later strike price.

Move: The contracts permit traders to bet on how much the value of a cryptocurrency’s price will fluctuate over a period of time regardless of direction, effectively making them an attempt at predicting volatility. If the price of the cryptocurrency in question fluctuates over a certain dollar amount, either upwards or downwards–the contract earns profits.

Spot Markets: FTX provides more than 100 spot trade pairs, giving access to the most popular cryptocurrency, like Bitcoin, Ethereum, Binance Coin, Chainlink, and Ripple’s XRP.

FTX US offers nearly 60 spot and spot currency trading pairs, as well as options contracts based on 0.01 bitcoin and 0.1 Ether, cryptocurrency swaps, and Bitcoin mini futures. It also runs a market for non-fungible coins.

FTX provides futures pairs that have margins that go up to 101x when it comes to the short or long-leading cryptocurrency which allows traders to profit from tiny price movements.

Regulation

FTX is registered within Antigua and Barbuda and headquartered in the Bahamas following its move to the Bahamas from Hong Kong in September 2021. Their FTX Digital Markets Limited. unit is overseen through the Securities Commission of the Bahamas. The exchange doesn’t offer products or services for U.S. residents.

U.S.-based crypto traders can use FTX US, a registered money service company that is affiliated with FinCEN. In the month of October 2021, FTX US completed its acquisition of LedgerX which was rebranded under the name FTX US Derivatives. FTX US Derivatives is licensed as a Derivatives Clearing Organization, Swap Execution Facility, and Designated Contract Market by the U.S. Commodity Futures Trading Commission (CFTC).

Management and Capital Structures

FTX along with FTX US have overlapping management teams. Both companies name Sam Bankman-Fried as the chief executive officer, and Co-founder Gary Wang as chief technology officer.

FTX completed the $400 million Series C venture capital financing round in January 2022, valuing it at $32 billion. Investors who participated include Temasek, Paradigm, Ontario Teachers Pension Plan Board NEA, IVP, SoftBank Vision Fund 2, Lightspeed Venture Partners, Steadview Capital, Tiger Global, and Insight Partners. All investors who participated in the round also took part in a series one funding round to FTX US valuing that company at $8 billion.

FTX Exchange is not regulated in the United States. U.S.-based traders have access to only the partner entity FTX US.

Celebrity Affiliations

In their marketing initiatives, in the course of their marketing, the parents of FTX along with FTX US in September 2021 signed Golden State Warriors point guard Stephen Curry to a long-term promotional agreement, which will grant the NBA star an interest in FTX.

On August 20, 2021, these companies announced a long-term promotion collaboration with venture capitalist and TV personality Kevin O’Leary providing the “Shark Tank” host with equity stakes FTX as well as FTX US together with payments in cryptocurrency.

Cryptocurrencies on FTX

FTX provides more than 300 cryptocurrency options to trade on the spot. Here’s a brief listing of the available assets on the exchange:

  • Bitcoin (BTC)
  • Ether (ETH)
  • Solana (SOL)
  • Litecoin (LTC)
  • Ripple (XRP)
  • Dogecoin (DOGE)

Trading Experience

FTX provides a variety of features. It also acknowledges that novice users might have a difficult time finding the features they need. To assist with this the exchange offers an overview of the features.

The most important information is provided in detail on every page of the FTX website. For instance, for those who are interested in staking the token of FTX, or FTT, the exchange clearly outlines the requirements. It states that the process of unstacking can take up to 14 days and tokens that are used to unstake won’t count towards the staking reward. Additionally, users who wish to withdraw their stakes fast can pay fees.

There’s a wealth of content posted on diverse topics that provide FTX with an explanation of its diverse offerings, terms, and regulations. For instance, consider margin trading as an instance. It is a key product offered by FTX. Because of the complexity of margin trades, FTX is a great job of explaining its terms for the transactions. The most important aspect those who are interested in margin trading would like to understand is what triggers the margin call.

FTX clarifies that an account owned by a user could be liquidated if the Margin Fraction is below its maintenance Margin Fraction. FTX makes use of the example of a user’s maintenance margin percentage of 6 percent. If the customer’s leverage is 16.66x leveraged liquidation will commence.

FTX Exchange: pros and cons

Pros Explained

It supports margin trading and trading in futures: FTX offers several advanced options, including futures trading and margins. This could be attractive to advanced traders who are able to manage the risk.

Access to markets with advanced features: FTX offers many advanced options that aren’t found with other exchanges. This includes access to markets such as shares, leveraged tokens volatility, and forex.

Pros and Cons Explained

U.S. residents can’t trade on the global platform of FTX: Due to the strict regulations that govern the crypto market within the United States, residents of the U.S. have limited access to FTX. The exchange does have one U.S. partner, FTX.US however, its offerings are less extensive than those on that of the international platform.

There isn’t a live chat option for support: FTX does not offer live chat support. While it does have the most comprehensive help desk but finding the information you require can take a long time.

Fees

FTX offers an equilibrated maker/taker fee structure. Trading fees differ based on the 30-day trade volume. FTT token holders receive discounts on their platform fee.

Here’s what you can expect from users in terms of fees for maker/taker.

FTX maker/taker fee structure

FTT token holders may receive discounts on platform fees These discounts can be categorized as follows:

Fee Discount Chart from FTX.com

FTX users could also be subject to withdrawal fees or fees for trading and creating leveraged tokens.

Security

FTX provides industry-standard security features such as the following:

  • A custom-built hot/cold wallet solution
  • All hot wallet funds have full external backing
  • Each account will require two-factor authentication (2FA).
  • Optional 2FA and password to withdraw cryptocurrencies
  • Establishing relationships with industry-leading custodians

Opening an FTX account

It is easy to open an FTX account. The exchange guides you step-by-step through the entire process from beginning to end.

You will need to create a strong password and enter your email address twice.

FTX requires all new customers to verify their identity before they can trade crypto or deposit. To explore the platform, users who are not verified can log in to their accounts.

Users who only provide basic information such as full name, birth date, and country of residence are restricted from the platform and subject to withdrawal restrictions. FTX’s complete verification process requires users to provide proof of address, share a government-issued ID and undergo facial recognition. After this, they are granted full access to the platform and unlimited withdrawals and deposits.

Customer Service

FTX doesn’t offer live chat or 24/7 phone support. Customers who need assistance are encouraged to use its support platform. FTX doesn’t provide any information about the average time taken by its staff to respond to a support request.

You can submit a support ticket as well as reach out to FTX via Telegram.

FTX Telegram group information is public, so users need to be cautious about sharing it.

FTX also has a large library of articles that answer many questions users might have about the exchange.

Customer satisfaction

FTX has received mostly negative customer reviews, just like many other cryptocurrency exchanges. FTX’s customer support is the most common reason for user complaints. One common complaint was the time it took for customer service to respond.

As mentioned above, FTX does not provide a time frame for customers who submit tickets. Customers complained about very serious issues such as waiting months for withdrawal requests to be approved.

The FTX platform has received positive reviews for its user-friendliness, low withdrawal fees, and overall ease of use.

FTX Exchange compared

FTX vs. Binance

FTX vs. Binance at a Glance

AreaBinanceFTX
HEADQUARTERSNo headquartersNassau, Bahamas
COMPANY TYPECryptocurrency exchange, derivatives, NFTs, Earn, DeFiCryptocurrency exchange, NFTs, TC
FEES0.01% to .5%0.00% to 0.4%
SECURITYHighHigh
BEGINNER FRIENDLYYesYes
VERIFICATION REQUIREDYesYes
AVAILABLE CRYPTOCURRENCIES300+250+
PROPRIETARY TOKENYes (BNB)Yes (FTT)
ON-SITE WALLETYesYes
BUY/DEPOSIT METHODSACH Bank Transfer, Wire Transfer, PayPal, and Credit/Debit cardACH Bank Transfer, Wire Transfer, PayPal, and Credit/Debit card
SELL/WITHDRAW METHODSACH Bank Transfer, Wire Transfer, PayPal, and Credit/Debit cardACH Bank Transfer, Wire Transfer, PayPal, and Credit/Debit card
YEAR ESTABLISHED20172018
FIAT TRADINGYesNo
GOLD OR PRECIOUS METALSNoNo
Binance vs FTX table summary

Beginner Friendliness

Both platforms are quite user-friendly which means it’s easy to start on both. For the beginner, the interfaces of both platforms could be to be a little intimidating since some graphs and charts come with an arduous learning curve.

An intermediate user can easily navigate the way to navigate both platforms. Binance however has advantages due to the fact that it has Binance Academy that provides many courses for beginners who need some assistance getting started with all things crypto-related.

Trade in Derivatives and Margin

Binance, as well as FTX both, provide options for derivative trading and margin for their customers. This is the process of borrowing from lenders such as banks, traders, or brokers that are on the platform to maximize the potential profits by leveraging.

Binance provides a less extensive selection of cryptocurrencies that can be borrowed for margin trading and also a restricted number in trading pairs. FTX however, contrary offers a greater choice of options as well as more trading pairs to those who wish to benefit from these options. For example, FTX goes as far as providing derivatives, such as the MOVE Contract, permanent contract, and even futures contracts.

Fee Structure

For charges, both platforms offer almost identical options. Binance charges 0.1 percent on any spot trade regardless of the currency you choose to use.

FTX also is charged an additional 0.1 percent charge for all spot trades However, it is contingent on the cryptocurrency being traded, as each comes with a different fee structure. The difference is that Binance has a significantly lower fee for withdrawals than its competitor because they are calculated on the amount of money that is withdrawn from or deposited into your account.

Each Binance and FTX have fee structures that are based on the volume of trading they receive. Makers and takers on Binance pay fees that range from 0.02 percent up to as much as 0.1 percent, while FTX makers, as well as takers, will pay anywhere from 0% and 0.4 percent.

Trust and Security

Binance along with FTX both come with security features, which ensure your funds are secure. Binance keeps around 10% of its trade fees in a secured account that serves as an insurance policy in the event in the event of an attack. This was in response to the phishing attack that occurred in the year 2019 which resulted in the platform losing $40 million.

Since the beginning, Binance has worked to bring back trust among its customers using tools, such as a 2-factor authentication system and whitelisting of wallets and IPs for all accounts.

FTX employs a variety of security measures that protect the funds of its customers. The platform utilizes SSL encryption for every data transfer, meaning that all information you transmit is secure by encryption. You can also whitelist specific IP addresses and wallets with FTX.

The Sign-Up Procedure

In either case, signing up is fairly simple as there are no strict know-your-customer (KYC) conditions. This means you don’t have to supply them with your identity card or proof of address and other vital personal information.

It is only necessary to sign up with an email address with a valid ID and select a password that is secure. In order to be eligible for more generous withdrawal limits, your account must be checked manually, particularly on Binance. It may take a few days for your account to be cleared.

Available Cryptocurrencies

Both platforms provide a broad selection of digital currency and tokens that can be traded with other users. Binance has more than 300 coins. FTX even goes further by providing 275 coins that can be traded.

But in terms of trading pairs that are available across both platforms Binance is the superior edge since its list of trading pairs is extensive compared to FTX. Here’s a breakdown of some of the top cryptocurrencies that are available across both platforms.

Binance

  • Bitcoin
  • Ethereum
  • Binance Coin
  • Litecoin
  • Cardano
  • Uniswap
  • Dogecoin
  • Ripple XRP
  • Solana
  • Polygon
  • Chainlink

FTX

  • Bitcoin
  • Litecoin
  • Chainlink
  • Solana
  • USD Tether
  • Dogecoin
  • TRON
  • SushiSwap

Highlight Characteristics

One of the best things you’ll see in both Binance and FTX is their lower transaction fees for standard transactions.

Users also have access to more generous withdrawal limits for accounts that are verified manually according to the exchange they choose to use. FTX specifically, has an ATM card that lets you make use of your cryptocurrency with a variety of merchants on the internet. Binance however, on its own is a launchpad that gives holders of crypto the opportunity to invest early in the upcoming crypto and NFT-connected projects.

Our Verdict Too close to call

Although they are relatively new to the scene and despite being relatively new, the two companies Binance along with FTX have proven to be extremely efficient. effectiveness in their business. They provide a variety of cryptocurrencies to trade and numerous security measures to ensure your money is secure. But in terms of the charges charged by both trading platforms, Binance offers a small advantage over FTX.

But, Binance has a more affordable withdrawal fee than FTX, since they are calculated on the currency being withdrawn from your account or transferred into it. The two Binance and FTX provide fairly comparable fees, and their interfaces generally are similar.

To determine the best option between the two options it is important to know your needs as an investor. If you’re all about low costs, then Binance is the best way to take. If you’re looking for greater limits on withdrawals, with more derivatives available to exchange, FTX might be better to suit your needs in terms of trade.

FTX against Crypto.com

FTX and Crypto.com at a glance

FeatureCrypto.comFTX
HEADQUARTERSSoutheast AsiaNassau, Bahamas
COMPANY TYPECryptocurrency exchangeCryptocurrency exchange
FEES0.036% to 0.144%0.02% to 0.07%
SECURITYHighHigh
BEGINNER FRIENDLYYesYes
VERIFICATION REQUIREDYesYes
AVAILABLE CRYPTOCURRENCIES100+250+
PROPRIETARY TOKENYes (CRO)Yes (FTT)
ON-SITE WALLETYesYes
BUY/DEPOSIT METHODSACH Bank Transfer, Wire Transfer, PayPal, and Credit/Debit cardACH Bank Transfer, Wire Transfer, PayPal, and Credit/Debit card
SELL/WITHDRAW METHODSACH Bank Transfer, Wire Transfer, PayPal, and Credit/Debit cardACH Bank Transfer, Wire Transfer, PayPal, and Credit/Debit card
YEAR ESTABLISHED20162018
FIAT TRADINGNoYes (Not in USA)
GOLD OR PRECIOUS METALSYes (PAXG)Yes (PAXG)
Binance vs FTX table summary

Beginner Friendliness

Both FTX and Crypto.com are user-friendly for beginners. They have intuitive interfaces which make it simple for anyone, even beginners, to exchange digital currencies. They also provide many products and features that are uncommon within the crypto market.

Both exchanges can be accessed on both Android and iOS devices, which is an advantage for new traders who are on mobile. In addition, both exchanges provide the mobile application and API that is available to third-party platforms. Of the two exchanges, Crypto.com’s mobile interface is the most user-friendly and it has more customer support tools for users in the event that the user is stuck.

Fees

Both, FTX and Crypto.com, offer fairly low fees. Both exchanges have fees that are competitive that are usually less than other top cryptocurrency exchanges. Crypto.com offers commissions ranging from 0.036 percent to 0.144 percent, while FTX is charged fees that are based on a tiered fee structure that can range from zero to up to 0.07 percent.

But, Crypto.com does have advantages when it comes to charges for withdrawals and deposits. It does not charge any fee for deposits, and there are no minimum deposit requirements. However, FTX charges a 0.0004 BTC fee for BTC deposits.

When withdrawing funds, FTX will charge a small fee on BTC withdrawals less than 0.01BTC and also for all ERC-20 tokens as well as the ETH. Withdrawals over 0.01 BTC are free. Crypto.com only charges an 0.0005 BTC fee for express withdrawals. Overall, Crypto.com is the better option for fees.

However, one caveat is Crypto.com app is known to have greater spreads, which means you’re paying more for cryptocurrency.

Supported Payment Methods

FTX only supports bank transfers or wire transfers to facilitate withdrawals and deposits. For withdrawals and deposits made in crypto, FTX supports BTC, ETH, LTC, XRP, BCH, LINK, DOT, and TRX.

Crypto.com offers a wide range of payment options, including credit and debit cards, bank transfer wire transfers, as well as withdrawals and deposits of crypto. It also permits customers to purchase crypto using the fiat currency of their integrated exchange.

In the end, Crypto.com is the better choice for accepted payment methods.

Trust and Security

Each FTX as well as Crypto.com are well-known for their top-of-the-line security. They use the latest security measures to guard users’ funds and information.

A few of the security features that both exchanges share are 2FA, cold storage as well as SSL encryption. Furthermore, both exchanges have taken KYC measures to ensure compliance with the anti-money laundering laws.

One area in which Crypto.com stands out is its insurance policies. Crypto.com has insurance for user funds that are up at $500m. This means that customers are able to rest easy knowing that their money is safe should there be hacking and security breaches.

In the end, Crypto.com is the better option when it comes to security and trust.

A Variety of Products

Both FTX and Crypto.com provide a broad range of services and products. The exchanges provide spot trading and margin trades derivatives trading and much more. Additionally, they offer many options and services that are uncommon within the crypto world.

One area in which Crypto.com stands apart is customer support. It offers 24/7 live chat support unlike FTX offers only email assistance. This allows customers to seek help when they require assistance.

FTX’s offering of more sophisticated futures, spot market opportunities, leveraged tokens, and much more, is matched with Crypto.com’s DeFi-ready suite of products, which includes the capability to earn high yields by using their stake program.

Both platforms come complete with NFT markets.

Overall, FTX and Crypto.com provide a variety of services and products. Thus, they are in an equal position in this area.

Supported Cryptocurrencies

FTX offers a variety of cryptocurrencies, including BTC, ETH, LTC, XRP, BCH, LINK, DOT, and TRX. The exchange also lets users trade various fiat currencies, including USD, EUR, GBP, and JPY.

Crypto.com offers a broad variety of cryptocurrencies, such as BTC, ETH, LTC, XRP, BCH, and many more. It also permits customers to purchase crypto using the use of a fiat currency through its integrated exchange.

However, even though FTX has over 300 cryptocurrency options in comparison with Crypto.com’s 250 currencies, FTX’s collection of coins is vastly different from the ones you can find on Crypto.com along with different FTX competitors. For instance, some sought-after coins such as Cardano or Polkadot aren’t included on the list provided by FTX.

Here’s a brief overview of some currencies you can find on every platform.

Crypto.com

  • Bitcoin
  • Ethereum
  • Cardano
  • Dogecoin
  • Vechain
  • Solana
  • Terra
  • Polkadot

FTX

  • Bitcoin
  • Tether
  • Ethereum
  • Dogecoin
  • Solana
  • BNB
  • XRP

Highlight Specifications

The most notable features on FTX are more impressive than the ones on Crypto.com.

The platform has an option for margin trading with as much as 20x leverage. The platform also provides a broad variety of derivatives, including futures, options, as well as leveraged tokens.

However, Crypto.com offers a built-in exchange that lets users buy crypto using an actual currency, and its most well-known attribute, aside from the potential to earn dividends using cryptocurrency is that its users can avail protection of up 500 million dollars.

Finally! Crypto.com offers an incredible cryptocurrency-based credit card that comes with advantages such as complimentary Netflix plus up to 8% cash back in CRO.

Conclusion: FTX Better for Serious Traders

If you’re looking for the winner overall it is all about what you’re seeking. If you are looking for sophisticated traders who be equipped with all the tools needed for trading in crypto, FTX is the better option. The exchange provides a broad variety of products and features that are uncommon in the crypto world.

But, Crypto.com has the advantage of being the more well-rounded choice since it does not just offer low fees, but it also has an easy user interface, not to mention an array of DeFi features.

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