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December 13, 2022

What's the Difference Between FTX and Celsius?

FTX is a cryptocurrency exchange based in the Bahamas. FTX was founded in Antigua and Barbuda and had its headquarters in The Bahamas. The exchange was founded in 2019 and had over one million users as of February 2022. FTX operates FTX.US — a separate exchange for residents of the United States.

FTX is a centralised global cryptocurrency exchange that offers innovative products such as derivatives, options, and leveraged tokens. It also supports over 300 cryptocurrencies — a large number compared to competitors.

Comparatively, Celsius Network LLC is an inactive cryptocurrency lending company. Celsius was headquartered in Hoboken, New Jersey, with offices in four countries. Celsius was a cryptocurrency saving and lending platform that allowed users to earn interest on their cryptocurrency, and borrow money using cryptocurrency as collateral, among other things. On June 12, 2022, Celsius announced that customer withdrawals, transfers, and swaps would be suspended.

But how does FTX compare to Celcius, and what makes it better?

1.FTX Can Lead in DeFi

FTX boasts a wide range of features, and it recognises that new users may struggle to find them. The exchange addresses this by providing an overview guide.

Important information is also clearly stated throughout the FTX website. For those interested in staking FTX's token, FTT, the exchange lays out the rules. It states that unstacking takes 14 days and that tokens set aside for unstacking do not count toward staking rewards. It also says that users who want to unstake quickly can do so for a fee.

FTX provides several advanced features, such as margin and futures trading. This may appeal to sophisticated traders who can manage the risks. FTX provides many advanced features not found on other exchanges. This includes access to markets such as stocks, leveraged tokens, volatility, and forex. However, FTX entails the risks inherent in cryptocurrencies, such as token volatility and even losses due to exchange hacks; as more companies enter the space, more people become comfortable with crypto investing and trading.

FTX specifies that a user's account may be liquidated if their Margin Fraction falls below their Maintenance Margin Fraction. FTX uses the example of a customer with a 6% maintenance margin fraction. Liquidation will begin if the customer is 16.66x leveraged.

FTX is a rapidly expanding cryptocurrency exchange that provides advanced trading options such as margin and futures trading. While US residents cannot use it due to strict regulations, a separate exchange—FTX.US—is available, but with fewer crypto offerings.

2.Celsius Has Struggles of Its Own

Celsius was designed to function similarly to a traditional bank, but for crypto rather than fiat currency. It was once regarded as one of the most successful components of the DeFi movement.

Celsius claimed 1.7 million users and $11.7 billion in assets under management (AUM) just two months ago. According to the company, it has made more than $8 billion in loans and offered high annual percentage yields (APYs) of up to 17% on cryptocurrency deposits.

But everything came crashing down in June 2022. Celsius issued a memo informing users that their assets had been frozen, sending the price of Bitcoin and other cryptocurrencies down with it. Celsius previously stated that it had only $167 million in cash on hand to support "certain operations" during its restructuring process.

This is also different from the crypto lender's first brush with controversy. CoinInsider is in  agreement with this based on regulatory pressure; the platform stopped offering interest-bearing accounts to non-accredited investors earlier this year. The states of Alabama, New Jersey, and Texas issued restraining orders against Celsius last year for allegedly selling unregistered securities to its users.

Will FTX Buy Out Celsius?

FTX, previously led by failed crypto billionaire Sam Bankman-Fried (SBF), is reportedly thinking about bailing out Celsius Network by bidding on the bankrupt lender's assets. The news was released the same day that Alex Mashinsky resigned as CEO of Celsius.

Recent reports surrounding FTX's interest in Celsius Network are based on information from a source close to SBF's dealmaking. However, neither party has issued an official statement at the time of writing.

In September 2022, it was reported that FTX was in talks with investors to raise $1 billion which, if secured, would help the exchange maintain its $32 billion valuation during a bear market.

Celsius declared bankruptcy in mid-2022 after disclosing a $1.2 billion deficit. Reuters (News - Alert) reported in August 2022 on Ripple's interest in purchasing Celsius' assets, which has since cooled. However, FTX has not yet responded to allegations of bailing out Celsius.

Following its victory in an auction to obtain the assets of now-defunct crypto brokerage firm Voyager Digital Ltd., FTX Trading Ltd.'s US arm is reportedly considering bidding for the assets of bankrupt cryptocurrency lending platform provider Celsius. FTX has considered or purchased several prominent cryptocurrency and blockchain-related companies this year during the crypto winter. Until FTX issues a formal statement regarding its plans with Celsius, mere allegations based on behavior will stand.

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