Why most of Exchanges FAIL ?

[$weetne$$]

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 doesn't concern us because if they were managing the exchange well and not misusing the funds of their customers they won't have been found guilty and the attacks on their reputation ends up making their exchange to shutdown. Exchanges are becoming greedy, I have seen that many of them are thinking that they're above the laws therefore they're operating any how without caring about the users making use of their exchanges. Exchanges are failing because they're violating anti-money laundering laws and any individual caught of this violation has to be punished in spite of the market not having a regulatory body. More centralized exchange are always going to fail because they're the exchanges that the government can attack and find faults as they'll always have greedy team members.

[Queentoshi]

...

Exchanges are businesses, and it is not easy to keep a business functional for many years. Due to the many challenges both the internally generated and externally generated that can be faced in a business, so many businesses are not even able to survive a ten-year period.

According to data from the Bureau of Labor Statistics, as reported by Fundera, approximately 20 percent of small businesses fail within the first year. By the end of the second year, 30 percent of businesses will have failed. By the end of the fifth year, about half will have failed. And by the end of the decade, only 30 percent of businesses will remain — a 70 percent failure rate.

https://www.entrepreneur.com/starting-a-business/the-true-failure-rate-of-small-businesses/361350

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.

Some of these holders are investors who have no one to advise them properly that though they are investing, they are doing it the wrong way.

[MarjorieZimmermanGinger]

It doesn't concern us because if they were managing the exchange well and not misusing the funds of their customers they won't have been found guilty and the attacks on their reputation ends up making their exchange to shutdown. Exchanges are becoming greedy, I have seen that many of them are thinking that they're above the laws therefore they're operating any how without caring about the users making use of their exchanges. Exchanges are failing because they're violating anti-money laundering laws and any individual caught of this violation has to be punished in spite of the market not having a regulatory body. More centralized exchange are always going to fail because they're the exchanges that the government can attack and find faults as they'll always have greedy team members.

Our job is only to use the exchange for transaction purposes and buying and selling. Problems of abuse and their customers will be faced with the laws that apply in the area where the exchange operates. Therefore, we have to be smart about using exchanges and not using them to store the bitcoins we have. The mistake people make is not understanding how unsafe it is to store bitcoin on an exchange so that when they have problems they will lose the assets they own. There have been many exchanges that have experienced problems in recent years and they generally find it difficult to escape legal charges that result in blocking exchanges that do not obtain operational permits anymore.

But what we need to remember is that exchanges are not a place to store bitcoin because the level of security is still considered sufficient not safe. If you fail to understand a safe place to store bitcoins then any losses that occur will be the full responsibility of each of us. Now that there are much safer wallets for storing bitcoins, anyone has to find out which wallets can provide a sense of security for us to store bitcoins.

[EarnOnVictor]

-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 ?

Yes, of course, it concerns me, and if not for my money, but for the money of those who would be their next victim. You can imagine those ones who have had issues of insolvency in the past, what happened to them? Till today, it is promises upon promises, but still, they've not redeemed it and people's money has been trapped ever since then. This is bad, I do not wish it for anyone. But the issue of Kucoin and any others that the US government charges or found guilty of misappropriation and money laundry is not a huge one because the worst is for the brains behind it to be jailed and the company fined just like what happened with Binance and CZ.

Even if they were charged much, the US government is responsible enough to ensure the safety of the company and their customers, so they will not enforce the compliance of the charges in a manner that will cause liquidation. The company will be okay, it is not the first time that companies would be charged with money laundry and I do not think there are so many global companies dealing with money can be exonerated from that.

[goaldigger]

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.

Regulation might be the top reason but yeah, we cannot set aside the fact that they scammed their user and most of those failed exchanges have a bad history of customer service, probably they are meant for that. If top exchange like Binance will failed, what do you think will happen in the market? For sure there will be a huge panic and many will ask, what exchange you can trust if a big exchange like Binance will ended in the same faith?

[shinratensei_]

thats why you never put all your egg in the same basket, using exchange is fine, as long as you don't put all your investment money in just one exchange i mean there are plenty reputable exchange out there why just put it in one exchange while the service to be honest from one another doesn't differ that much at best there might be some incentives and promos but thats it but indeed not your key not your money that is really a sacred saying when dealing with these exchange we just don't know when these exchange might just suffer from disaster.

it kinda reminds me of ftx, had those people that lost their money save it in their own wallet they won't be losing their money but instead ftx just collapsing with all the money of its customers still in their hand.
saving up the money by our own means even if using metamask is safer since that is your key and your wallet you have all the rights to it.
it should be a reminder for people out there if you are using exchange at least try to diversify it across various exchanges to avoid collapse of an exchange.

[Best-mary]

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 ?

Well, I have said it here before. I only use two exchange and that's Binance and Bitget. With the last incident that happened with Kucoin, I did check the latter to be sure I'm literally safe with them and I found out they already obtained an MCB long before now and they also have a cold wallet; https://www.bitget.com/support/articles/360040068632-Bitget-Obtains-The-US-MSB-License

[justdimin]

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.

That's how the market works, you can't just start and keep growing and growing and growing. I believe that we need to reach to a point where things could go better. I believe that we need to consider the situation as something that is a bit more zoomed out, and that means something.

We should consider this situation as just a very normal market movement, and if you zoom out then you will realize that we are not doing anything that will change things all that much, so we need to realize that. When you look at weekly, you may see ups and downs, but if you look yearly, it is not bad, and if you look even further, it is doing great. So that's why we should all consider bitcoin to be something that will make us some profit in the end.

[Questat]

Well, I have said it here before. I only use two exchange and that's Binance and Bitget. With the last incident that happened with Kucoin, I did check the latter to be sure I'm literally safe with them and I found out they already obtained an MCB long before now and they also have a cold wallet; https://www.bitget.com/support/articles/360040068632-Bitget-Obtains-The-US-MSB-License

Good thing you chose these exchanges but never say you're safe 100%, you will never know what is their plan.
I've been a user of Bittrex but stopped before the collapse of this site. I have no bad experience with Bittrex nor do I think this would happen to them but yes, it was hard to figure out what is their mind (owners), they can stop their operations if they want to and show different stories to the public about their closure. Even in Kucoin, we can't assure our funds are safe until it was totally deposited in our fully controlled wallet address.

[Denamen]

I think we can see that an exchange facing numerous problems may not be able to solve them, leading to its downfall. First is technology; I believe hacking is always easier than building. It takes a lot of work and effort to construct something, like building a house, but it only takes a hammer to break a hole in it and steal all your assets. Second is money; fewer people can resist the temptation of money. Yes, there's a lot of money involved. Why not take 10% from laundering black money rather than 1-2% from normal people? I believe people can see many problems, but I've just pointed out the two main ones.

[Geurangsang]

I think OP are right and remind me of a common statement in this group, it's never store your assets in an exchange wallet, but always keep it in your own wallet. Actually, I have experienced this thing after quitting the crypto world for a while and I left several assets on exchange such as Forkdelta, Bittrex and Bibox. That asset has been lost forever and it has always remained seared in my memory.

Indeed, we really have to choose an exchange that has a good and trustworthy reputation. However, that is not always a guarantee. The point is that we must always be vigilant to keep our assets as safe as possible. Bankruptcy that occurs on exchanges is not in our control, but we must always care about where our assets are.

[Lanatsa]

thats why you never put all your egg in the same basket, using exchange is fine, as long as you don't put all your investment money in just one exchange i mean there are plenty reputable exchange out there why just put it in one exchange while the service to be honest from one another doesn't differ that much at best there might be some incentives and promos but thats it but indeed not your key not your money that is really a sacred saying when dealing with these exchange we just don't know when these exchange might just suffer from disaster.

it kinda reminds me of ftx, had those people that lost their money save it in their own wallet they won't be losing their money but instead ftx just collapsing with all the money of its customers still in their hand.
saving up the money by our own means even if using metamask is safer since that is your key and your wallet you have all the rights to it.
it should be a reminder for people out there if you are using exchange at least try to diversify it across various exchanges to avoid collapse of an exchange.

Sticking with the current best would really be the sweetest spot that you should really be doing but its true that never ever tend your coins to be parked on an exchange for too long which we know that risks involved that it could possible issues that might happen along the way.We've been through those tons of exchange hacks and issues that these platforms do really suffer on. We've been through tons of of situations on which we cant really be able to deny that it is really that indeed risky on leaving up your assets on exchangers. We do know that you dont possess the keys of your wallet or account so once they do have those kind of issues then it would really be that hard on making such recovery.
This is why on the time that i have finished myself on doing trading then i do usually pull my funds or making out some withdrawal. Yes, it is really that too hassle and that costly when it comes to fees
but we know that fees doesnt hurt that much if in exchange for the overall safety of your funds.

Actually i cant blame on into those people who are really that making those kind of doesnt care about the condition or situation that they might be able to face on because they are really that too confident into the platform that they are really that been dealing into. We've seen through this back in the past and its up to you whether you would really be still having that complete trust into them or would really be skeptical already on the things that you are dealing with.
Somehow its not really that too easy for these platforms to be taken down but well its up to you on how you would really be handling out such risks and possibilities.

[o48o]

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 ?

You left out 2 of the biggest of at their time. Cryptsy and Mintpal which were both exit scams. Mintpal was famous among whales and cryptsy was basically main altcoin exchange at the time. These days owning your own keys was more reasonable as there were basically only few exchanges that were legit, and many of us weren't sure what those were. People hated regulations and wanted legitimacy at the same time. That's a combination that just doesn't work.

But anyway, we have come long way from there and new legit exchanges have born and i have way more trust in them to handle my cryptos then myself handling my own cold wallet keys. I lose house keys, usb sticks, important papers and such all the time so why in the name of god i would be safer storing my own privatekey. Places like kraken, bitfinex and coinbase have my full trust. Or at least i have more trust for them then i have myself.

I have however seen binance sketchy, but kucoin was is like imitation of binance, and way more sketchy. I could see kucoin going down any day and i wouldn't be surprised. Binance could go down too, but that i see way more problematic, as that would bring whole market with it. Markets crashing with FTX would be nothing next to it.

[suzanne5223]

Does this concern you ?

The failure of cryptocurrency exchange is a concern of every crypto enthusiast cause it will literally impact the market price which means it should be the concern of us all.
The sad thing is that this issue will continue to happen because most crypto exchange owner/teams never learn from previous exchange failures and they still choose to work on their failure part.

[dansus021]

Why most of Exchanges FAIL ?? In my opinion why most of the Exchange fail is because of Mismanagement of their money they tend use user money to cover up their business expenses we take example of ftx that use their user money to invest in other projects using Alameda research or celsius uses big APY and APR to attract more user and ending up bleeding cash when the bear market come.

or other factor such as a hack on their system and the push from their government

[Jawhead999]

Most of exchanges fail because they're businesses, there's no business that exist without risk.

Any exchanges will fail when they lack of customers, while they need to pay operational expenses.

Centralized exchanges will fail when someone hack the sites and can access their hot wallets.

Decentralized/unregulated exchanges will fail when they're asked to complying with regulations, which make them only have two choices: become CEX or shutdown.

[doomloop]

Does this concern you ?

No, it doesn't concern me mostly because I don't keep my funds in exchanges other than the capital that I used for trading and when I'm not trading, I take it out and keep it in a wallet where it's safe. It should be a concern for people who keep all their assets in an exchange platform which is a wrong thing.

Exchanges serve a different purpose, they are not wallets and they aren't supposed to be used as wallets. If one needs a place to store their assets so that they stay safe, they need to use a non-custodial wallet for that purpose instead of using an exchange platform no matter how reputable it is. Use an exchange only for trading and not for storing your coins because anything can happen at any time.

[God bless u]

I think that these types of exchanges were violating the laws from a very long time now the thing to note is why they are accused now then why not before?
 
The answer to it is that governments now want full control over the crypto market as well so that they can impose the taxes and get a handsome amount from the traders. They were ignoring it because it was not that much of a big market until now. Crypto is the fasting growing industry and in the future it'll be more successful. People like Elon Musk are showing interest in it and it's not an ordinary thing. That's why governments are trying to put pressure on these types of exchanges.

[el kaka22]

I would say that most exchanges are actually destined to fail, they are terribly managed and that's why they do so badly, I feel like there isn't anything that could make it work better because they start with something that would make it change in the end.

I am not saying that it is going to be something that will take a while, I am just saying that we are talking about a situation that will change with time because exchanges are now built in a way that is terrible, but they are billions of dollars worth, so someone who is super rich will end up making something that is FAR FAR better than whatever we have now, even better than Binance, that will for sure will happen one day and we are going to end up with something better.

[sheenshane]

I would say that most exchanges are actually destined to fail...

I don't think so, if that is so, we have a decentralized exchange to choose from.
Most problems of those centralized exchanges are combating regulation against SEC, if you're not wise enough for this as an exchange owner, you might suffer from failure business.  We shouldn't let our funds sleep on exchange to avoid possible risk because we don't know when they will be hunted down by the regulators.

The OP was right, we should always consider this, Not your key, not your coins.
Use the exchange to trade (buy and sell) not considering it as your wallet.