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FTX Announces Removal of High Leverage, With Greatest Allowable being 20x.

2 mins
Updated by Ryan James
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In Brief

  • FTX Exchange has announced it will decrease its margin trading leverage.
  • The max possible leverage will now be 20x.
  • Bankman-Fried called high leverage unhealthy for the crypto ecosystem.
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FTX CEO Sam Bankman-Fried has announced that the exchange will be reducing its leverage options to 20x as the highest level now offered. 

In a recent thread on Twitter, Bankman-Fried announced that FTX will now be offering no more than 20x in terms of leverage trading on the exchange. 

In the thread, Bankman-Fried backed the decision with several key points. The FTX founder attributed the exchange’s approach to “responsible trading” as one of the points for the move. 

Bankman-Fried also stated that liquidation revenue on FTX makes up “a tiny fraction of our volume.” The FTX found goes on to elaborate that the majority of crypto exchanges currently offer high levels of margin trading, and that they too would agree that liquidations and positions make up a tiny fraction of volume. He further added that liquidations on FTX make up less than 1% of the company’s volume and positions. 

The move to 20x leverage 

Bankman-Fried added that the majority of traders on FTX utilize 2x leverage. He goes on to state that arguments for high leverage use are not baseless. “And while we think that many of the arguments are high leverage miss the mark, we also don’t think it’s an important part of the crypto ecosystem, and in some cases it’s not a healthy part of it.”

After some deliberating internally, FTX has therefore decided to reduce margin trading size down to 20x as the maximum possible leverage usable. Bankman-Fried stated “And so, after lots of back and forth, we’re going to be the ones to take the first step here: a step in the direction the industry is headed, and has been headed for a while. Today, we’re removing high leverage from FTX. The greatest allowable will be 20x.”

Bankman-Fried concluded that the move would not affect the majority of traders, since “very few use it”. Additionally the now billionaire concluded that FTX has “a lot of cool new features and announcements coming down the pipe.  (We didn’t raise that capital for nothing!)”

FTX recently closed out its Series B funding for a record-breaking $900 million. The amount raised becomes the largest raise in crypto-exchange history. The exchange continues to push competition in the likes of Coinbase and Binance. 

Top crypto platforms in the US | March 2024

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Ryan James
Ryan Boltman is a dynamic and experienced professional with a rich background in marketing management, business development, and cryptocurrency journalism. With a BCOM in Marketing Management from the University of South Africa and an Honors in Business Management, Ryan has honed his expertise across multiple countries including South Africa, the USA, and the Netherlands. His career includes significant roles in customer success, sales management, and content creation within the blockchain...
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