Best FTX Alternatives: How to Keep Your Crypto Safe

Want to jump straight to the best FTX alternatives? The best alternative is Omni, a fully secure multichain crypto wallet for crypto trading, DeFi, and NFTs.

As the cryptocurrency industry continues to grow, so too does the number of centralized crypto exchanges offered on the market. While these exchanges have historically attracted newcomers with high interest rates, 2022 has shown this isn’t sustainable. 

Now more than ever, holding your crypto within your own custody is crucial to keep your investments safe. Exchanges are opaque in their operations, and thousands of investors have been left without their principal due to risky tactics used by centralized finance (CeFi) platforms. 

Trust is the crux of the cryptocurrency exchange industry. This is because users place their trust in exchange operators to appropriately manage and protect their crypto assets. Alternatively, Web3 wallets and applications are trustless, as funds are held by users and smart contract code manages transactions.

However, most Web3 wallets are primitive and don’t offer the same offerings as crypto exchanges. Some wallets, such as Omni, now offer full self-custody wallets that allow users to invest in crypto, use DeFi, buy NFTs and do even more than exchanges like FTX.

In light of the collapse of the crypto exchange FTX, this article will explore FTX alternatives that crypto investors can get started with today!

What Is a Cryptocurrency Exchange?

Cryptocurrency exchanges are digital marketplaces where you can buy or trade crypto for other assets, such as fiat currency or other digital currencies. Exchanges reflect the current market prices of the cryptocurrency they offer. 

In addition to trading services, crypto exchanges offer price discovery through trading activity, as well as storage for crypto. Generally speaking, there are three types of crypto exchanges:

• Brokers: traditional security brokers can act as intermediaries between the crypto market and investors who want to sell or buy crypto. 
• Traditional Crypto Exchanges: these platforms provide trading services based on daily market prices. They often charge fees for transactions and can either be centralized or decentralized.
• Centralized Crypto Exchange (CEX): a type of exchange that is controlled by a third party (referred to as an exchange operator), to ensure that trading and customer sign-up operate smoothly.
• Decentralized Exchange (DEX): a type of exchange that lacks third-party participation and depends on peer-to-peer (P2P) trading. DEXes require one or two more steps than CEXes but they can be much safer as you never have to let an exchange hold your cryptos.

What Happened With FTX?

Before exploring what happened with FTX, it is important to start with Alameda Research. FTX is backed by Alameda Research, a trading firm that provides liquidity in cryptocurrency asset markets. 

The collapse started when Alameda Research’s balance sheet was leaked on Nov. 6, 2022. The majority of Alameda Research’s assets were reportedly held in illiquid altcoins, with the FTT token making up most of its assets. Understandably, this lack of liquidity shocked many investors. 

The largest holding was made up of $3.66 billion of unlocked FTT tokens, while the third largest holding was $2.16 billion in FTT collateral. The remaining assets comprised $863 million in locked SOL, $292 million SOL, $134 million USD and $2 billion in equity services.

In response to the leak, Alameda Research’s CEO Caroline Ellison tweeted that Alameda had more than $10 billion of assets that weren’t displayed on the balance sheet, claiming that the specific balance sheet is for a subset of their corporate entities. Her response wasn’t enough to comfort investors. Alameda’s ratio of unlocked vs. locked crypto assets was too frightening. 

Among the shocked members of the crypto community was Binance CEO CZ, who announced that Binance was going to liquidate FTT tokens it received from FTX last year. “Due to recent revelations that have come to light, we have decided to liquidate any remaining FTT on our books,” CZ tweeted.

Did FTX Pause Withdrawals?

CZ’s tweet incited mass panic in the cryptocurrency market, causing massive dumping of FTT tokens. Having witnessed the Terra Luna situation, many investors also proceeded to withdraw their assets from FTX, which ignited a run-on-the-bank situation. 

FTX executed around $6 billion in withdrawals in two days and eventually ended up halting withdrawals – exacerbating the downward selling pressure of FTT. Most recently, FTX filed for chapter 11 bankruptcy with the US government.

Is FTX Bankrupt?

Sam Bankman-Fried announced that not only is FTX International Exchange filing for chapter 11 bankruptcy, but so is FTX.US, the supposedly separate U.S. exchange, and Alameda Research. John Ray is leading FTX through its bankruptcy process. Interestingly enough, Mr. Ray helped lead Enron through its bankruptcy process. The similarities in the two cases were not lost on the crypto community.

Will FTX Users Get Their Funds Back?

The U.S. bankruptcy court will decide how the remaining assets of FTX are split up so time will tell if users get their funds back. Either way it will almost certainly be a lengthy process.

How to Keep Your Cryptos Safe

The demise of FTX highlights that no centralized exchange is truly safe. FTX was previously  ranked as the fourth-largest exchange by volume according to CoinGecko, demonstrating that even the most well-established exchanges are susceptible to collapse.

The best way to keep your cryptocurrency safe is through the use of a personal, decentralized wallet. They provide users with more control, authority, and most importantly, peace of mind. As the saying goes in the crypto space, ‘not your keys, not your crypto’. 

What does this mean? Well, when you hold your crypto on a cryptocurrency exchange, the exchange holds your key for you in a custodial role. The key can be thought of as a cryptographic code that authorizes access to your crypto. While not having to worry about your private key alleviates pressure, it exposes the user to a few key risks. 

Firstly if the exchange is hacked then oftentimes, there is no way to recover your crypto. Personal wallets eliminate this risk by storing your private key offline. This prevents hackers from being able to access your holdings through traditional means. Another key risk of holding your crypto on exchange is that the exchange owners could go bankrupt – as demonstrated by FTX. Bottom line, there is no guarantee that an exchange can keep your crypto safe, hence a personal wallet is a great way to stay in absolute control of your funds.

Most investors still use a centralized exchange to buy their cryptos and incur the same risk of losing funds, even for a short period of time. Now there is a great way to completely avoid trusting an exchange with your cryptos: Omni. 

Best FTX Alternative: Omni

Omni, previously called Steakwallet, is a Web3 wallet that was founded by Serafin Lion Engel, James Stackhouse, and Alex Harley. Omni aims to provide an easy-to-use, highly functional, versatile Web3 wallet without sacrificing self-sovereignty. Moreover, it’s free self-custodial which makes it an attractive option for beginner and experienced investors. 

Omni offers multi-chain support for both cryptocurrency and NFTs. Over 25 different blockchains are supported, meaning that users can interact with almost any of the blockchains they want to interact with. Whether you want to go from USDT on Ethereum to MATIC on Polygon, Omni has you covered.

Omni also provides a great fiat onramp, a feature that, until recently, was monopolized by centralized exchanges. Now you can buy cryptos with a credit card and have them straight sent to your personal wallet. This way no one is ever in control of your cryptos except for you, completely avoiding the risk of losing your portfolio to exchange bankruptcies.

Another fantastic application feature that adds to the consumer experience is Omni’s three-tap staking’ feature powered by Omni’s unique Smart Delegation Protocol. As the name suggests, this feature enables users to start staking in only three taps, distinguishing Omni from other crypto wallets that are governed by more cumbersome and complex staking systems. 

What To Look For in the Best FTX Alternatives

As demonstrated by the FTX collapse, reputation is quintessential for choosing an exchange. Before creating an account, you should start by thoroughly researching the exchange's credibility and track record and see what others are saying about the exchange.

Once you feel comfortable with the reputation of the exchange, there are several features that you can assess. Among the most important features include security, fees, coins supported, functionality, and product offering. How you prioritize these features will depend on your investing goals and overall experience within the crypto space. 

For example, advanced traders may seek out exchanges with advanced trading features or a variety of coins supported such as Binance. However, others may value branding, customer service and ease of use, opting for exchanges such as Crypto.com or Coinbase. 

Other Great Alternatives to FTX

While it is true that exchanges are the least secure place to store your crypto, they offer multiple advantages for investors. The most notable advantage of exchange wallets is convenience and, sometimes, the incentives that exchanges offer for using their wallet. Here are a few of the best alternatives to FTX:

Coinbase

Coinbase Global Inc. (NASDAQ: COIN) is a reputable, web-based crypto exchange platform that was founded in 2012 as a place to send and receive Bitcoin. The exchange allows users to buy, sell, trade and earn interest on an extensive suite of cryptocurrencies. Coinbase is one of the best FTX alternatives because of its immense security, great selection of cryptos, and great user interface. Coinbase’s mission is to create an open financial system for the world and to be the leading global brand for helping people convert digital currency into and out of their local currency. With over 98 million users and $256 billion in assets on the platform, Coinbase is a trustworthy choice.

Gemini

Gemini is a stellar cryptocurrency exchange with industry-leading security features and a robust support center; it is a great choice for beginners and experienced traders alike. Gemini was founded in New York by the famous twin billionaires, Tyler and Cameron Winklevoss. It is regulated by the New York State Department of Financial Services (NYSDFS). The four key operational pillars of Gemini include licensing, product, security and compliance. Unlike some of its competitors, Gemini is available in all 50 U.S. states and offers digital asset insurance in the event of a hack or security breach.

Crypto.com

Crypto.com is another one of the best FTX alternatives and is a very popular U.S. cryptocurrency exchange. It offers an extensive list of tradable assets and relatively low trading fees. Users can buy, sell, trade and earn interest on more than 250 cryptocurrencies with spot trading, futures and advanced order types. However, it is worth mentioning that only CRO currency holders can benefit from the significant discount on trading fees.

Compared to FTX, Crypto.com offers superior interest-earning capabilities. Users can earn up to 14.5% p.a on their cryptocurrency and up to 8.5% p.a. for stablecoins.

Is Switching Exchanges Worth It?

Overall, switching exchanges from FTX is definitely worth it, provided that you switch to one of the best FTX alternatives. For example, if you notice that another exchange boasts superior features in a niche you value, such as trading tools, then it also makes sense to switch exchanges.  

Moreover, if you start having doubts on the financial health of an exchange, then perhaps that is a clear signal that a safer choice is to migrate to an alternative exchange with a superior reputation. That said, it is important to remember the trade-off between holding crypto on an exchange versus in a personal wallet such as an Omni wallet. Whenever you are in doubt about the safety of your crypto, it is best practice to transfer your assets to cold storage.