Why most of Exchanges FAIL ?

[Dailyscript]

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.

It concerns who its meant to concern. Most times i dont see anything wrong in their management. The main priority at times that these exchanges put into consideration is security. This is because that is the target of online hackers and their competitors to bring them down. Yet, i feel they are not doing a great job, this is their business there should be no excuse of failure if they really mean business.

It seems you are having a problem with exchanges. I know the transaction fees are so high in some exchanges, even internal trading fees are so high. Which has been proven that they are somewhat greedy. Meanwhile it doesn't mean that they should be facing such challenges from the government or users. Just like in the case of Binance and Kucoin.

[Hamphser]

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

Failure does usually getting in line when it comes to legal aspects aside from hacking incident or getting that being kicked out by the competition. If we do tend to look overall the things which makes an exchange fail on which if not getting hacked then having regulation issues or totally just that lacking demand and recognition. As an owner then there would really be several angles on which this business could fail.
So as much as you can then you would definitely be finding up ways for you to avoid that, we do know that exchange platform business is something that could bring up fortune into its owners
and this is why we do see several of them but we know that regulation has become that standard.

For users stand point of view, then failing of these platforms could happen. This is why its not really recommended that you should really be that leaving your coins into exchangers
or making it as your main wallet.

[iv4n]

...
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 ?

With raging fees, it can be hard to move the funds in & out of cold wallets, so it's cheaper to hold the coins in a trusted exchange. It can be risky, but those with money in Binance exchange have never lost their funds. And I think that Kucoin users are also safe.

What's happening with Kucoin founders is probably the same as what happened to CZ. He was charged, he paid the fines, and now he is free... Binance is still operating with a new "boss" and that's it. So we can assume that these two Kucoin founders will have the same destiny.

[Kelward]

This does not concern me at all. I just use these exchanges to cash out Bitcoins or swap coins. I never store huge amount of coins in these exchanges. Moreover I have always used the Binance and Bittrex from the past few years. I never jumped to other exchanges and hence always ignored what’s happening there. The main reason for which these exchanges shut down is the transparency with the customers and government. Nothing can be done. Use the ones which are already available in the market for long term.

It'll only concern investors and traders that leaves their coins in exchanges, they'll be the ones to worry if their exchange fails, because experience has shown that despite how reputable an exchange is, they can still go bankrupt. One of the things that I repeatedly learnt as a newbie in this forum is "not your keys not your coins" and "keep your coins in a none custodial wallet", so it'll be irresponsible of me to go against these golden rules. We're not only worrying about external hackers in exchanges, even their CEOs engage in shady deals with investors funds.

[shinratensei_]

It'll only concern investors and traders that leaves their coins in exchanges, they'll be the ones to worry if their exchange fails, because experience has shown that despite how reputable an exchange is, they can still go bankrupt. One of the things that I repeatedly learnt as a newbie in this forum is "not your keys not your coins" and "keep your coins in a none custodial wallet", so it'll be irresponsible of me to go against these golden rules. We're not only worrying about external hackers in exchanges, even their CEOs engage in shady deals with investors funds.

yes it does affect investors and traders heavily and the amount of people that invests and trades and leave their coin in these exchanges are huge, we know how ftx collapse causes massive losses towards their customers.
its always good to not put an egg in the same basket, these exchange could just do something very ridiculous behind the scene that danger our money for nothing, basically some exchange seeing from history aren't just as safe as banks, its entirely different thing at least with banks everything guaranteed with the government but with exchange we all know how settlement could be so complicated seeing from the cases of ftx where people are finally getting rewarded with their money back but we are talking about money before the pump happening.

if you can diversify money across various exchange that are reputable where you can trust it, because avoiding exchange collapse is a thing too

[Plaguedeath]

yes it does affect investors and traders heavily and the amount of people that invests and trades and leave their coin in these exchanges are huge, we know how ftx collapse causes massive losses towards their customers.
its always good to not put an egg in the same basket, these exchange could just do something very ridiculous behind the scene that danger our money for nothing, basically some exchange seeing from history aren't just as safe as banks, its entirely different thing at least with banks everything guaranteed with the government but with exchange we all know how settlement could be so complicated seeing from the cases of ftx where people are finally getting rewarded with their money back but we are talking about money before the pump happening.

if you can diversify money across various exchange that are reputable where you can trust it, because avoiding exchange collapse is a thing too

I agree if put all eggs in the same basket isn't good, but if you say we need to diversify our coins across various exchange, that's a big no-no.

Exchange isn't a place to hold coins, treat it like a marketplace where you only use to buy and sell Bitcoin, nothing more. If you leave your coins on exchange or you stake your coins in order to earn some %APY, your coins aren't safe and you will have a risk to lost your coins.

[Mr. Magkaisa]

       -    Literally speaking, when there are only a few people trading on a platform and there is only a small amount of incoming volume, an exchange will not really last long. We know that the heart of an exchange is in the traders who will buy crypto that is available on the exchange.

and when the volume that enters each of the listed coins is good, it is for sure that the exchange will survive, whether it is CeX or DeX.

[leonair]

       -    Literally speaking, when there are only a few people trading on a platform and there is only a small amount of incoming volume, an exchange will not really last long. We know that the heart of an exchange is in the traders who will buy crypto that is available on the exchange.

and when the volume that enters each of the listed coins is good, it is for sure that the exchange will survive, whether it is CeX or DeX.

Liquidity is required for an exchange to survive so when an exchange platform comes to the market it has to do a lot of potential marketing to reach people which is very costly. And this is why the new exchange platforms cannot survive long in the competitive market. And since money is kept in exchange platforms, everyone always prefers reputable platforms. Because of this new exchange platforms are not able to survive for long

[Cookdata]

       -    Literally speaking, when there are only a few people trading on a platform and there is only a small amount of incoming volume, an exchange will not really last long. We know that the heart of an exchange is in the traders who will buy crypto that is available on the exchange.

and when the volume that enters each of the listed coins is good, it is for sure that the exchange will survive, whether it is CeX or DeX.

When I see a new exchange that's doing cheap marketing, I just shook my head because any company that want to run a trading exchange right now more specifically the centralized ones need millions of dollars for liquidity and settlement before they can have a successful one right now because the competition is high, so high that even the existing ones are struggling with Binance and some tier 1 exchanges, you need as much more liquidity to survive the competition and also to gain trust with heavy partnerships and promotions.

That's what FTX was trying to do, look at the heavy promotion they were doing, the aim was to take down Binance, they were borrowing and but foolishly spending money any how. If they have properly make use of that exchange and not trying to outsmart customers, they will today perhaps sitting right next to Binance or even be ahead since CZ was hold by the US. Not sure what they did to CZ would be applicable to Sam Bankman Fried since he is US citizens and has many senators backing.

[$weetne$$]

It'll only concern investors and traders that leaves their coins in exchanges, they'll be the ones to worry if their exchange fails, because experience has shown that despite how reputable an exchange is, they can still go bankrupt. One of the things that I repeatedly learnt as a newbie in this forum is "not your keys not your coins" and "keep your coins in a none custodial wallet", so it'll be irresponsible of me to go against these golden rules. We're not only worrying about external hackers in exchanges, even their CEOs engage in shady deals with investors funds.

What I have learnt from my mentor is for us to not keep coins that we can not afford to lose on exchange because exchanges can close anytime. I read that the government are investigating many cryptocurrency exchanges for money laundry and other criminal offense and soon they will find many exchange guilty. Some exchange were already found guilty and other exchange will be found guilty too. For the exchange that does not have the backup money in their reserved to handle the withdrawal that will be coming to their exchange when they get sued by the SEC, they'll fail. Keeping our coins on exchange will make them very valuable to hackers stealing them therefore it is not a good decision to have our coins on exchange in spite of what our reason are for keeping our coins on centralized exchanges.

[Kelward]

It'll only concern investors and traders that leaves their coins in exchanges, they'll be the ones to worry if their exchange fails, because experience has shown that despite how reputable an exchange is, they can still go bankrupt. One of the things that I repeatedly learnt as a newbie in this forum is "not your keys not your coins" and "keep your coins in a none custodial wallet", so it'll be irresponsible of me to go against these golden rules. We're not only worrying about external hackers in exchanges, even their CEOs engage in shady deals with investors funds.

What I have learnt from my mentor is for us to not keep coins that we can not afford to lose on exchange because exchanges can close anytime. I read that the government are investigating many cryptocurrency exchanges for money laundry and other criminal offense and soon they will find many exchange guilty. Some exchange were already found guilty and other exchange will be found guilty too. For the exchange that does not have the backup money in their reserved to handle the withdrawal that will be coming to their exchange when they get sued by the SEC, they'll fail. Keeping our coins on exchange will make them very valuable to hackers stealing them therefore it is not a good decision to have our coins on exchange in spite of what our reason are for keeping our coins on centralized exchanges.

Thanks for this reminder, I totally agree that it's also good to leave only the coins that you can afford to loose in your exchange, in the case of short term transactions, because they can shut down at anytime. Governments all around the world, not just the US SEC are monitoring the affairs of exchanges, a top exchange like Binance is having a money laundering issues in Nigeria, and already the country has disabled the exchange's p2p in the country, who knows what other issues that Binance, might face in the future, so no exchange is totally safe from going down.

[Marvell1]

yes it does affect investors and traders heavily and the amount of people that invests and trades and leave their coin in these exchanges are huge, we know how ftx collapse causes massive losses towards their customers.
its always good to not put an egg in the same basket, these exchange could just do something very ridiculous behind the scene that danger our money for nothing, basically some exchange seeing from history aren't just as safe as banks, its entirely different thing at least with banks everything guaranteed with the government but with exchange we all know how settlement could be so complicated seeing from the cases of ftx where people are finally getting rewarded with their money back but we are talking about money before the pump happening.

if you can diversify money across various exchange that are reputable where you can trust it, because avoiding exchange collapse is a thing too

I agree if put all eggs in the same basket isn't good, but if you say we need to diversify our coins across various exchange, that's a big no-no.

Exchange isn't a place to hold coins, treat it like a marketplace where you only use to buy and sell Bitcoin, nothing more. If you leave your coins on exchange or you stake your coins in order to earn some %APY, your coins aren't safe and you will have a risk to lost your coins.

Storing assets on exchanges has never been recommended because of risks like FTX or Mt.gox have caused, but in the cryptocurrency market not everyone just buys and holds to make profit. There are many people who are making profits through staking, P2P trading, daily trading, futures...and to be able to do that, they need to leave their assets on the exchanges. And this is also the biggest drawback of DEX so far as they have not been able to develop these features.

When we invest in the market it means we accept risks and are aware of the risks we will encounter. So depending on how you earn, you will store your coins in a non-custodial wallet or an exchange.

[Natalim]

       -    Literally speaking, when there are only a few people trading on a platform and there is only a small amount of incoming volume, an exchange will not really last long. We know that the heart of an exchange is in the traders who will buy crypto that is available on the exchange.

and when the volume that enters each of the listed coins is good, it is for sure that the exchange will survive, whether it is CeX or DeX.

Liquidity is required for an exchange to survive so when an exchange platform comes to the market it has to do a lot of potential marketing to reach people which is very costly. And this is why the new exchange platforms cannot survive long in the competitive market. And since money is kept in exchange platforms, everyone always prefers reputable platforms. Because of this new exchange platforms are not able to survive for long

The room for these new exchanges is quite very small which means only a few of them to survive and succeed.
Not to mention how many of new exchanges are created every day but guess what, what we just heard and what people are using are still the old ones. And I know why because people are looking for security assurance and we know that using new exchanges carries huge risk as they are still building their reputation. While old exchanges like Binance and Kucoin already had which give traders/investors the confidence that they are looking for.

[terrific]

When we invest in the market it means we accept risks and are aware of the risks we will encounter. So depending on how you earn, you will store your coins in a non-custodial wallet or an exchange.

Not on an exchange because if you're keeping there and you understand the risk, you're too confident with that and that's quite dangerous.
As you earn, you also need to keep yourself informed on how you should keep your money safe and away from exchanges.

[Uhwuchukwu53]

       -    Literally speaking, when there are only a few people trading on a platform and there is only a small amount of incoming volume, an exchange will not really last long. We know that the heart of an exchange is in the traders who will buy crypto that is available on the exchange.

and when the volume that enters each of the listed coins is good, it is for sure that the exchange will survive, whether it is CeX or DeX.

This is just the reality, it's a direct reason to the course failed exchange. Just like other investment the numbers of customers matter on how the business will progress mostly once it has to do with customers that are good in buying or investing.

Exchange is best for trading but where the number of trader us very minimal it defeat the purpose of the exchange as the income to the exchange can't be enough to maintain others servicing feel and all general maintenance that may include the human resources of the exchange in regards to their payment. Typical example selling shop with low customer may definitely closed down if they lack customer and may find it deficult to pay rentage, of shop as well workers if they lack customers.

[Fara Chan]

Liquidity is required for an exchange to survive so when an exchange platform comes to the market it has to do a lot of potential marketing to reach people which is very costly. And this is why the new exchange platforms cannot survive long in the competitive market. And since money is kept in exchange platforms, everyone always prefers reputable platforms. Because of this new exchange platforms are not able to survive for long

Now there are so many exchange platforms that have a good reputation in the eyes of many people that they will continue to progress if they don't face problems internally. Because most people will definitely not choose a new exchange platform to put money into it to carry out several activities such as trading and others. So the developers of the new exchange platform have to do more trials and continue to compete and carry out more promotions to introduce their new platform to more people so they can get more users.

[redsun114]

       -    Literally speaking, when there are only a few people trading on a platform and there is only a small amount of incoming volume, an exchange will not really last long. We know that the heart of an exchange is in the traders who will buy crypto that is available on the exchange.

and when the volume that enters each of the listed coins is good, it is for sure that the exchange will survive, whether it is CeX or DeX.

Liquidity is required for an exchange to survive so when an exchange platform comes to the market it has to do a lot of potential marketing to reach people which is very costly. And this is why the new exchange platforms cannot survive long in the competitive market. And since money is kept in exchange platforms, everyone always prefers reputable platforms. Because of this new exchange platforms are not able to survive for long

Yeah I agree, still when we talk about competition, exchanges that are newly launched but have planned everything very well and wish to stay in the industry for a long will do everything they can to stay in the competition, they would have a budget for marketing purposes that they would use to bring users and liquidity to their platform so that other traders coming in don't face problems. They will also provide promotions and offers to individuals and projects for using their platform to have a solid base after the launch.

Platforms that aren't serious about the business and have planned only to get into the business with minimal investment so that they can earn some money will barely care about these things which is why they don't survive for very long.

[lixer]

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?

Regulation is supposed to be a good thing as it can make their business more legal, therefore I don't think it's one of the reasons on why an exchange can fail. For those who do a scam, I think they are still successful there. I know it crazy but a bad customer support can only be normal and not enough to say that a platform is a scam. Binance exchange have almost failed a couple of times and I think the market is still standing strong. The same thing might be experienced even if they fail for real. It's only normal for a business to fail. The key is to not put all your trust and always be observant so that you can evacuate safely and then move to another secure one.

[Bobrox]

Exchange isn't a place to hold coins, treat it like a marketplace where you only use to buy and sell Bitcoin, nothing more. If you leave your coins on exchange or you stake your coins in order to earn some %APY, your coins aren't safe and you will have a risk to lost your coins.

Some exchange giving excited offer by staking coins has bigger percentage of APY, I remember with how many people loss their fund after staking with USTC as Luna stable coins with reward 20%. Most of staker not understand well risk facing with stable coins offer above 20% and price of UST dropping drastically.
If hold coins or assets in exchange market never put in staking pool, you need requirement more than 24 hours for unstake coins with potential price dropping drastically without waiting for your coin landed to main balance. Many exchange get scam awhile and most careful when staking coins or hold it in exchange, always priority if want staking coins without requirement more than 24 hours fund return to main balance.

[jrrsparkles]

Exchanges fail basically due to two primary reason one is Bankruptcy as you mentioned and other one is hack that affects the users funds too, hackers always targetting the crypto exchanges and if they see any vulnerability in their security system they will drain millions in split second and after that the recovery is close to zero.