FTX exchange crash: A lesson for all Nigerian crypto traders

By: Damian Okonkwo

Traders lose money as FTX exchange files for Bankruptcy

The crypto market has suffered what appears to be the greatest blow in its history with the crash of the second largest crypto exchange which saw over $200Billion wiped out of the crypto market in less than 12hrs after the news. Over 5 million users trading on the exchange including Nigerian crypto traders have been unable to access and withdraw their funds from the exchange after the founder of the FTX exchange - Sam Bankman-Fried filed for bankruptcy protection under Chapter 11 of the US laws and resigned his position as the CEO of the exchange.

The current crash of the FTX exchange has exposed the vulnerability of using the Centralized exchange for crypto trading which in itself goes against the purpose of cryptocurrency when it was first created. It has further exposed the risk involved in cryptocurrency trading where the trader's capital is always at risk and he stands the chance of losing his whole investment should either the project or exchange he is dealing with crash in the future.

What are the lessons to learn from the FTX exchange crash today？

The major lesson every crypto trader must learn from the recent crash of the second-largest crypto FTX is that the investor's capital is always at risk while dealing with a Centralized exchange. Thus, in cases of attack or bankruptcy eruption on the exchange, there is usually no law to protect the trader and restore the lost funds. It is therefore very necessary for every crypto trader using a Centralized crypto exchange to understand the risk involved before proceeding to trade on the exchange.

What are the risks involved in cryptocurrency trading？

· Prices are very volatile and could crash in the future.

· The trader's assets are usually exposed to attack or hacking

· Decentralization makes it difficult to recover lost funds and trace transactions

· Some crypto projects are subject to pump and dump in the market

· There is no assurance for profits