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

Brett Harrison, the former president of FTX US, criticized the practice of offering extreme leverage—up to 1,001x—on volatile crypto assets, deeming it irresponsible and a significant issue. He is launching a new perpetual futures exchange, Architect, focusing solely on traditional assets, with much lower leverage options to mitigate risks. Harrison emphasized the dangers of high leverage, such as rapid account blowouts and liquidation cascades that can destabilize the market. He praised perpetual futures for their utility but highlighted that offering excessive leverage on volatile markets is akin to gambling rather than trading. Harrison's exchange will cap leverage at 25X for less volatile assets, ensuring safer trading conditions. This move comes amid growing concerns about the impact of high-leverage products in the crypto market, especially after a recent $19 billion wipeout in derivatives, making it clear that responsible leverage management is crucial for sustainable trading practices.

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