Crypto Leverage Trading a 'Major Problem', Says Former FTX US President

Brett Harrison, the former president of FTX US, expressed concerns about the high leverage offered in crypto trading, calling it irresponsibly excessive. Harrison is preparing to launch a new perpetual futures exchange focusing on traditional assets, completely excluding cryptocurrencies from its offerings. He views the practice of offering leverage up to 1,001x on volatile assets as a significant issue that leads to rapid account blowouts. While proponents argue that high leverage democratizes access to trading, Harrison maintains that it resembles gambling and that the primary objective of a derivatives exchange should be to facilitate safe trading rather than prioritizing liquidation fees. His upcoming exchange, Architect, will limit leverage to 25x for less volatile assets and 8x for more volatile ones, a stark contrast to the current crypto derivatives market, which sees substantial trading volumes driven by high leverage. Harrison warns that irresponsible leverage can create liquidation cascades, further harming retail traders in the cryptocurrency space.

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