Why most of Exchanges FAIL ?

[adaseb]

Looking back in history since Bitcoin was created back in 2009
There were a lot of different exchanges like

• FTX, November 2022. Bankruptcy Type.
  Three Arrows Capital, July 2022. Bankruptcy Type.
  BlockFi, November 2022. Bankruptcy Type.
  Core Scientific, December 2022. Bankruptcy Type.
  Voyager Digital, July 2022. Bankruptcy Type.
  Celsius, June 2022.
  Babel Finance, June 2022.
  Hodlnaut, August 2022.
  Cryptopia ,
  Bittrex ,

It happen with all and it can happen with Current ones
e.g the last one KuCoin like 7 Days ago two of its founders were charged with violating anti-money laundering laws by U.S.
Be smart and keep your assets SAFE always use a Cold Wallet Your Keys Your Coins

Does this concern you ?

First of all Bittrex didn’t go bankrupt they just ceased operations due to regulations.

The others on your list such as Three Arrows capital isn’t an exchange. It was a trading firm which over leveraged and went under.

There are many exchanges that never did what FTX did, like Bitstamp or Coinbase. Many exchanges are legit and honest. Don’t let a few bad apples ruin the entire bunch.

[Hypnosis00]

 It is quite disappointing in the sense that it affects also the reputation of the crypto market but can't just hold on and keep these projects when the don't have;
 - lack of legality to run a business
 - lack of system support
 - improper management and use of funds
 - and most of all, lack of transparency that makes people to doubts

It is the reputation of the site means a lot to the users and active traders/investors. If this can never be found to an exchange, of course, nobody will take the risk and lose their money.

[Alpha Marine]

Does this concern you?

It does, not directly, but indirectly.
It doesn't affect me directly because I don't lose money with the collapse of those exchanges, but it affects me indirectly because things like this affect the industry. It takes the growth of the industry a few steps backward. The government keeps looking for ways to discourage crypto, they fight it with whatever they can find, and things like exchange collapse just give the regulatory agencies more ammunition.

Most people in my country don't mind using centralized exchanges and that has made it difficult to see people who are ready to buy Bitcoin in exchange for my local currency on decentralized exchanges, because of this I use a centralized exchange that does not require KYC, but with the recent regulations, selling or buying bitcoin on that exchange without KYC is no longer allowed.
That's why I said it doesn't affect me directly, but it does indirectly.

[sokani]

Does this concern you ?

I don't keep my assets on a CEX but I'd say it does concern me. Cases of bankruptcy cause the market to bleed like that of Mt. Gox exchange that affected the prices of crypto assets and it took a while for the market to bounce back. Also, it gives the government reasons to paint cryptocurrency black and discourage people not to invest. So I think this should be everyone's concern and we should try to sensitize people on the dangers of having their funds on CEXs.

[Silberman]

Looking back in history since Bitcoin was created back in 2009
There were a lot of different exchanges like

snip

It happen with all and it can happen with Current ones
e.g the last one KuCoin like 7 Days ago two of its founders were charged with violating anti-money laundering laws by U.S.
Be smart and keep your assets SAFE always use a Cold Wallet Your Keys Your Coins

Does this concern you ?

Most businesses regardless of the industry of which they are part of will fail, and exchanges are no exception to this rule, so it does not worry me, but it is because of this that we try to warn newbies about the dangers of leaving their coins for a long period of time on those exchanges, but they simply do not get it, and many of them do not realize their mistake until it is too late and they have lost their coins to one of those exchanges and then they complain bitterly about it.

[retreat]

And because of this, crypto users need to be wary of centralized exchanges because at any time their services can be disrupted by various problems, whether internal or external. So always make sure that if you want to hold Bitcoin for a long period of time, a custodial wallet is the best choice for this. Because when you store your assets on an exchange, at any time those assets could disappear along with the service going bankrupt. But when you store your Bitcoin in a custodial wallet, you don't need to worry about your assets being lost, since you are the only one managing the wallet.

[el kaka22]

It is simple really, you give someone billions in dollars to hold, while you trade, and they end up making a fail. Remember, not only crypto, but fiat goes into their hands as well, and not like they are audited which means that you do not know if all that money is actually in there. Which they could use to make even more money, imagine a place has 1 billion dollars, even if they absolutely no trading fee or anything, they could simply just put that money into savings, literally the least risky thing, and still make tens of millions of dollars from it. So that is exactly why they are taking risks and then losing.

Of course there are also ones that gets hacked, that's a security issue and I can see why something like that could happen with any exchange which means we should never use exchanges as a wallet; move out your coins as soon as your job is done with the exchange.

[Cryptomultiplier]

Looking back in history since Bitcoin was created back in 2009
There were a lot of different exchanges like

• FTX, November 2022. Bankruptcy Type.
  Three Arrows Capital, July 2022. Bankruptcy Type.
  BlockFi, November 2022. Bankruptcy Type.
  Core Scientific, December 2022. Bankruptcy Type.
  Voyager Digital, July 2022. Bankruptcy Type.
  Celsius, June 2022.
  Babel Finance, June 2022.
  Hodlnaut, August 2022.
  Cryptopia ,
  Bittrex ,

It happen with all and it can happen with Current ones
e.g the last one KuCoin like 7 Days ago two of its founders were charged with violating anti-money laundering laws by U.S.
Be smart and keep your assets SAFE always use a Cold Wallet Your Keys Your Coins

Does this concern you ?

It should be of concern to every other individual who uses kucoin or any exchange for that matter to accept the risk involved and still trade or transact on that exchange.

Its also important to use cold storage wallet for large investment that could be more than several years altogether else, small savings or HoDling or coins that can be spent swiftly can be received on an exchange and used there for payments and transactions.

Exchanges fail for not adhering to the government laws and policies of setting up a business and delivering good service that's transparent and free of money laundering accusations as well as free from hacks and scammers.

[bitLeap]

It happen with all and it can happen with Current ones
e.g the last one KuCoin like 7 Days ago two of its founders were charged with violating anti-money laundering laws by U.S.
Be smart and keep your assets SAFE always use a Cold Wallet Your Keys Your Coins

Does this concern you ?

As a trader, this may be a cause for concern, but not all exchanges will suddenly experience problems. There will be a process or notification from the media that can be obtained, therefore if you are a trader on one of the exchanges you must always follow every update from that exchange. Like it or not, you have to be the most updated because the assets are there.

However, hodlers don't need to worry because centralized exchange is only a temporary bridge and it doesn't take long, buy then withdraw to a cold wallet.

[bettercrypto]

If there are exchanges that fail in this field of the crypto space, it is because the volume of traders is low. Of course, if there are no buyers entering an exchange, no funds will enter the exchange.

It's no different when you set up a casino; if there are no gamblers to enter money to play in the casino, the casino will not be able to survive. The same is the case with the exchange, especially if the competition in the market is intense.

[Fara Chan]

If there are exchanges that fail in this field of the crypto space, it is because the volume of traders is low. Of course, if there are no buyers entering an exchange, no funds will enter the exchange.

It's no different when you set up a casino; if there are no gamblers to enter money to play in the casino, the casino will not be able to survive. The same is the case with the exchange, especially if the competition in the market is intense.

The examples and comparisons you give really make sense because in general every place is not visited by many people, either to buy the products in it or to use the services in it. This place will not progress and often even goes bankrupt because there is no money circulating in it so that whatever system has been developed will actually slowly die. Exchanges, banks and any casino places always need customers or users so they can operate well because for each user there are of course fees that must be paid to the exchange or the bank and also the casino.

[Gladitorcomeback]

If there are exchanges that fail in this field of the crypto space, it is because the volume of traders is low. Of course, if there are no buyers entering an exchange, no funds will enter the exchange.

It's no different when you set up a casino; if there are no gamblers to enter money to play in the casino, the casino will not be able to survive. The same is the case with the exchange, especially if the competition in the market is intense.

That's not always the case with exchanges or other platforms failing. In this industry, a lot of projects including exchanges have failed in the past because of a lack of proper management from their owners or CEOs they mismanaged the funds of their customers which caused issues for the platform and such platforms went bankrupt or started losing interest from traders and investors when the news surpassed about what happened.

FTX is a very big example of that where SBF (Sam Bankman Fried) misused the funds of its customers and he was caught for that and recently was sentenced I believe 20 or something years in prison. After what he did, the exchange failed miserably and a lot of people lost a lot of money because of it.

Another example of mismanagement was LUNA, though it wasn't an exchange but the project failed due to poor management and bad decisions.

[Dunamisx]

Looking back in history since Bitcoin was created back in 2009
There were a lot of different exchanges like

• FTX, November 2022. Bankruptcy Type.
  Three Arrows Capital, July 2022. Bankruptcy Type.
  BlockFi, November 2022. Bankruptcy Type.
  Core Scientific, December 2022. Bankruptcy Type.
  Voyager Digital, July 2022. Bankruptcy Type.
  Celsius, June 2022.
  Babel Finance, June 2022.
  Hodlnaut, August 2022.
  Cryptopia ,
  Bittrex ,

It happen with all and it can happen with Current ones
e.g the last one KuCoin like 7 Days ago two of its founders were charged with violating anti-money laundering laws by U.S.
Be smart and keep your assets SAFE always use a Cold Wallet Your Keys Your Coins

Does this concern you ?

Looking from the list you have given, most of them were as a result of bankruptcy, which means to operate an exchange needs a huge financial stand, no wonder many of them exist as a joint collaboration, only few among others happened as a result of hack, making an establishment requires a lot of management practices to be in place so as to help see the business last in serving for it's purpose, none of these exchanges once affected ever come back again to life, the same way their users also lost their asset with them.

[$crypto$]

Learn from previous experiences where some exchanges failed so if you can't store assets on the exchange then it's nothing to worry about because you won't feel how assets are held only that this will have an impact on the market because people will panic and sell all the assets they have or move to other wallets.

The recent Kucoin incident is a sign that any exchange will fail we never know but when exchanges have problems with the law especially with allegations of money laundering from criminals then it will be strictly enforced.

I don't know why so many people still store on exchanges, is it because of convenience? Or is it more about trading? But still the assets held there will not be safe.

[Hamphser]

Learn from previous experiences where some exchanges failed so if you can't store assets on the exchange then it's nothing to worry about because you won't feel how assets are held only that this will have an impact on the market because people will panic and sell all the assets they have or move to other wallets.

The recent Kucoin incident is a sign that any exchange will fail we never know but when exchanges have problems with the law especially with allegations of money laundering from criminals then it will be strictly enforced.

I don't know why so many people still store on exchanges, is it because of convenience? Or is it more about trading? But still the assets held there will not be safe.

One of the thing im seeing that exchangers do really be able to experience is on having some legal issues on which this is where these business or platforms would really be usually having those kind of issues
or problems that they would really be able to face on on which we've seen in the past on how many sites that been switching up into that strict compliance about something and ended up on dropping their
users significantly until they've been not able to cope up when it comes to expenses and other stuffs until they would really be announcing some bankruptcy.

It could really be just only having that two possible situations on which it could neither be an exchange face up some legal issues or simply the community doesnt really
recognize them or simply pertains about the on the demand of the masses on which it would really be leading into that non sustainable kind of business
on which we know that it could really cause up on closing up doors.

[MarjorieZimmermanGinger]

It happen with all and it can happen with Current ones
e.g the last one KuCoin like 7 Days ago two of its founders were charged with violating anti-money laundering laws by U.S.
Be smart and keep your assets SAFE always use a Cold Wallet Your Keys Your Coins

Does this concern you ?

The establishment of an exchange must obtain permission and this is done so that the exchange can operate and sometimes the owner or person who has shares in it plays dirty games such as money laundering. But not all exchanges do that and if the exchange wants to look bigger, maybe the founders and people who own shares in it will try to play clean so that their exchange can progress and develop.

I don't think it's good behavior to use an exchange to store the bitcoin assets we have because as far as I know there are many exchanges that end up having problems. The exchange is used by most people only for trading and transaction matters because the rest we will move assets to a wallet which is much safer and more secure.

[KingsDen]

Be smart and keep your assets SAFE always use a Cold Wallet Your Keys Your Coins

Reminder: do not keep your money in online accounts.

Also you can see Exchange graveyards with Time and Cause of Death.

Most of exchange death causes will be

• Scam exit
• Hack and fail to compensate users, fail to recover itself
• Bad treasury management includes customer money; and bad risk management such as over leveraged; then bankrupt

Most times the way these exchanges fail is hidden from the audience. If it is exit scam, they can tag it hack. If it is mismanagement, they will also tag it hacking. So, it is necessary to know the real cause of exchange collapses and most times governments are not bothered because they are not much involved.

[Kelvinid]

Most of the exchange fails to comply with the legal permits to operate which pushes the authorities to stop their operation, a common alibi. But there is one reason close to such stoppage as they are boldly scammed. A good reason why we should be careful in choosing an exchange especially if it is new and most of all, use them as storage wallets. Even though they are reputable exchanges and have existed for many years, still we don't have to store huge amounts with them just to keep them secured because it is easy for them to say "They get hacked" and say sorry but to expect them a refund is quite impossible.

[Cookdata]

I don't keep my assets on a CEX but I'd say it does concern me. Cases of bankruptcy cause the market to bleed like that of Mt. Gox exchange that affected the prices of crypto assets and it took a while for the market to bounce back. Also, it gives the government reasons to paint cryptocurrency black and discourage people not to invest. So I think this should be everyone's concern and we should try to sensitize people on the dangers of having their funds on CEXs.

The journey of any successful assets doesn't start well and end well. If you look at the growth path of Gold, they have had there own downs and up and they were able to set up a tight regulation to weed out some of these bad people. Are we going to see regulations here in crypto? Maybe or maybe not but things that has happened to FTX will send a great message to other people that will be trying to pull any stunt on people's fund and trying to run away because no place to hide. You can see that even with this little bull run, the casualties of hack and scams are not as rampant like back in the last bull run yet.

It will not only send message to people stealing funds but even those who keep their money on exchanges, people will learn the conventional way of storage of coins in there hardware wallet and air gap device instead of centralized exchanges that doesn't give them power of their wallets storage.

[Awaklara]

e.g the last one KuCoin like 7 Days ago two of its founders were charged with violating anti-money laundering laws by U.S.
Be smart and keep your assets SAFE always use a Cold Wallet Your Keys Your Coins

Does this concern you ?

However, this news shows that there is panic. In fact, if I'm not mistaken, I also read that there were several large amounts of funds that were eventually moved from the exchange. This indicates that there is a large proportion of current holders or traders who still store their assets on the exchange.
I'm not so worried that some of the current exchanges will end up getting the same accusations in the future. now Kucoin, we don't know after that.