That is the exchange running away with the money. In past bear markets, several exchanges have gone bankrupt, including some of the top exchanges at that time. Which exchange will be the first to collapse in this round of market conditions?
Let's reminisce about the past incidents of exchanges running away.
Several ways exchanges run away
1. Coins stolen:
Bitcoinica: In 2012, Bitcoinica suffered three consecutive hacker attacks, losing over 100,000 bitcoins and unable to repay, ultimately Bitcoinica quietly shut down in November 2012.
MtGox: On February 7, 2014, MtGox, the largest exchange at that time (handling 70% of global Bitcoin transactions, the leader among global exchanges), also suffered a hacker attack. 850,000 BTC were stolen, and MtGox had no choice but to file for bankruptcy.
·
2. Misappropriation of user assets for trading
Fcoin: The 9,900 BTC flowing from Fcoin's public address to other exchanges led many to say that the owner of Fcoin went to other exchanges to play contracts and suffered liquidation. This resulted in the once-thriving FCOIN choosing to abscond directly in 2020. Fcoin's peak trading volume was even 10 times that of Binance.
FTX: Alameda once used FTT as collateral to obtain a large amount of loans, and FTX lent the funds deposited by customers to Alameda for repayment while trying to maintain the price of FTT. When users made large withdrawals, FTX was unable to repay, declaring bankruptcy at the end of 2022. FTX was once one of the top exchanges, and its influence is still felt today.
·
3. Directly abscond
ZB: On August 2, ZB exchange suddenly announced that it had encountered a failure, halting deposit and withdrawal services, without informing the recovery time. Later, after a period of recovery, ZB (Zhongbi) exchange really absconded on 2023-03-07. ZB was once considered a major exchange, and I know many people who traded on ZB.
BitForex: On February 23, 2024, the cryptocurrency exchange BitForex, claiming to be headquartered in Hong Kong, quietly transferred nearly $57 million from their hot wallet and then completely disappeared from the public eye.
·
4. Announce exit due to policy reasons
BTCC: The 94 incident in 2017 led BTCC, one of the largest exchanges in the country, to choose to exit the domestic market, never to recover, until it ultimately chose to close down. BTCC was once the first cryptocurrency exchange in the country, alongside OKcoin and Huobi, and was the most influential at that time.
Yunbi: Also one of the exchanges that chose to shut down during the 94 incident, the altcoin quality on Yunbi was quite good at that time. Due to the exchange's suspension of operations, many users chose to sell at a loss, resulting in heavy losses.
·
Over the years, I have seen too many exchanges abscond and collapse.
The reason most exchanges abscond in a bear market is still due to insufficient market profits to cover the exchange's expenses, leading to the inevitable misappropriation of user funds, which results in a ruptured capital chain and ultimately direct absconding.
Advice for everyone
Risk diversification (diversified investment), multiple wallets and exchanges both on-chain and off-chain to store assets, to cope with various emergencies.
Lastly, I want to say that where there are bears in the market, there are also bulls, and sooner or later, there will be times when you can make money.
