Locked Crypto Assets in Bankrupt FTX Derivatives Exchange? How to Avoid This Situation

03/31/2023 09:01 • Tech Trends • 95 views

On March 31, David Schwartz, chief technology officer of Ripple, said that he had $2500 in cryptocurrency locked in FTX Derivatives Exchange, the now bankrupt cryptocurrency trading platform. According to his tweet, Schwartz initially didn’t remember having money in FTX.

Ripple CTO: There are $2500 cryptocurrencies locked in FTX

Cryptocurrency trading platforms have brought about a new way to find investment opportunities but with their own set of risks. From time to time, news of cryptocurrency trading platforms going bankrupt or otherwise facing issues have come to the surface. One such news item has recently come out – on March 31, David Schwartz, chief technology officer of Ripple, said that he had $2500 in cryptocurrency locked in FTX Derivatives Exchange, the now bankrupt cryptocurrency trading platform. According to his tweet, Schwartz initially didn’t remember having money in FTX.
These types of scenarios can be avoided if we are cautious and meticulous while dealing with cryptocurrency trading platforms. In this article, we will guide you through the steps that are necessary to avoid locking up your assets in cryptocurrency trading platforms that may go bankrupt or face other difficulties.

Choosing the Right Exchange Platform

There are numerous options for cryptocurrency trading platforms in the market. Choosing the right one, however, takes due diligence. Research and compare several platforms to find the one that offers the features you need and has a solid reputation in the market. Don’t just focus on exchange fees or trading paired currencies, look at the security and safety aspects of the exchange platform. Check that the exchange is registered, has proper licenses and complies with national/international legal frameworks. A platform with good customer support can also increase trust in the platform.

Spread Your Investment

Another crucial aspect of investing in cryptocurrency trading platforms is diversifying your cryptocurrency assets. Spread your investment across various exchanges and avoid keeping all your cryptocurrency in a single platform. This will help you recover your losses faster if one particular platform goes bankrupt or faces other issues.

Stay Updated on Exchange News

The cryptocurrency trading platform world is known for its volatility with regular reports of new exchanges popping up and old exchanges shutting down. Consider subscribing to news alerts to stay up-to-date with significant market developments related to the exchanges where you hold cryptocurrency. Such alerts could help you see any potential risks and react promptly.

Take Control of Your Private Keys

Exchanges usually store cryptocurrencies for their users. However, in this case, you give up control of the assets to the exchange. This is not the ideal situation, as having control of your private key means you ultimately own that cryptocurrency. Consider using non-custodial wallets, such as hardware or software wallets, to store cryptocurrency assets. These wallets offer better security and give you more control over your funds.

Conclusion

In conclusion, cryptocurrency investment requires prudence, caution, and a thorough understanding of the market. Choosing the right exchange platform, spreading your investments across various exchanges, staying updated on exchange-related news, and taking control of your private keys can help you avoid cryptocurrency assets locking up in bankrupt or struggling cryptocurrency exchanges.
Would you like some specialized advice or a general comment? Have a look at the FAQ section below:

Frequently Asked Questions

#Q1. What is the safest type of cryptocurrency storage?

A1. Non-custodial wallets such as hardware wallets are considered the safest form of cryptocurrency storage as they are offline and your private keys never leave your device.

#Q2. What is the importance of spreading cryptocurrency investments?

A2. Spreading cryptocurrency investments across multiple exchanges helps to reduce the risk of asset locking if one particular exchange shuts down or faces other difficulties.

#Q3. Can cryptocurrency trading platforms provide insurance for user holdings?

A3. Some top cryptocurrency exchanges provide insurance coverage for users’ assets in case of any incidents of malfeasance or hacking etc. Make sure to research such exchanges before investing.

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