Failed crypto exchange FTX’s spectacular collapse was due to…


FTX’s collapse in November 2022 was due to “hubris, incompetence, and greed,” according to a report filed by the company’s debtors. FTX’s management and governance were “largely limited” to the exchange’s co-founders, while board oversight was “effectively non-existent.” The report also stated FTX lacked an organizational structure and did not have a complete list of its employees. The exchange’s accounting firm, which was unnamed in the report, appeared to have no specialist knowledge of cryptos or international financial markets. Furthermore, the report alleged FTX failed to put in place basic security controls to safeguard its crypto assets.Based on the information provided, it seems that FTX’s debtors have successfully recovered and secured over $1.4 billion in digital assets and are in the process of identifying an additional $1.7 billion in digital assets for recovery. The article mentions that a spokesperson for Bankman-Fried declined to comment, and Kroll and legal representatives for other parties did not immediately respond to a request for comment. It’s unclear at this time what caused the debt issues or what actions FTX is taking to address them. Hot wallets are connected to the internet and are more vulnerable to hacking attempts compared to cold wallets, which are not connected to the internet. However, hot wallets are also more convenient for transactions and can be used for immediate access to funds. So, it is common for exchanges to keep a portion of their assets in hot wallets for liquidity purposes while keeping the majority in cold storage for security reasons.