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The Unveiling of FTX’s Crises: What You Need to Know

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On April 10th, according to a report released by FTX creditors, on July 31, 2019, former FTX engineering director Nishad Singh changed the code base to allow Alameda to extract an

The Unveiling of FTX’s Crises: What You Need to Know

On April 10th, according to a report released by FTX creditors, on July 31, 2019, former FTX engineering director Nishad Singh changed the code base to allow Alameda to extract an unlimited amount of encrypted assets from FTX; A week later, it was modified to exempt Alameda from automatic liquidation, and FTX Group kept almost all encrypted assets in a hot wallet (SBF falsely claimed to use a cold wallet).

FTX creditors have recovered over $1.4 billion in digital assets, and another $1.7 billion is currently being recovered

Cryptocurrency has gained popularity over the years, and one of the exchanges that have attracted lots of users is FTX. However, on April 10th, a report was released by FTX creditors revealing the alarming crisis the exchange was facing. This article will dive into the details of the crisis and what it means for FTX users.

The Code Base Change

According to the report, FTX’s former engineering director, Nishad Singh, changed the code base on July 31, 2019, allowing Alameda to extract an unlimited amount of encrypted assets from FTX. This act of changing the code base gave Alameda a leeway to exploit FTX’s system at any time.

The Exemption

A week after the code base change, it was modified to exempt Alameda from automatic liquidation, inferring that even if Alameda caused significant losses to FTX, they would never undergo liquidation. This exemption raised many red flags as it is unethical for one user to be above the rules and policies of an exchange, which could lead to mistrust and conflicts.

FTX Group’s Involvement

The report also points out that FTX Group kept almost all encrypted assets in a hot wallet. This contradicts the CEO’s statement that they store their assets in a cold wallet, making users question the validity of his claims. SBF falsely claimed to inventory assets using a cold wallet, which would be impossible if the assets were in a hot wallet.

What this means for FTX users

The revelation of the crises that FTX is currently facing is alarming to users, and it is crucial to consider what it means for them. Firstly, it questions the security of their assets as the exchange was exploiting its system to protect one user. Secondly, it raises trust issues as users might lose confidence in the exchange and, as a result, shift to a more trustworthy platform.

Conclusion

In conclusion, the report released by FTX creditors raised many concerns about the state of the exchange. The exploitation of the system and the exemption of a user from the rules and policies of the exchange is unacceptable. The revelation of these crises exposes the vulnerabilities of cryptocurrency exchanges, and it is essential to prioritize the security of users’ assets.

FAQs:

1. How do I know if my assets on FTX are safe?
It is advisable to keep track of the development of the crises and contact FTX for more information.
2. Is it safe to continue trading on FTX?
Users are advised to exercise caution and consider using other platforms to trade their assets.
3. What steps can FTX take to restore user’s trust?
FTX can begin by being transparent about its policies and procedures and creating a better system to protect its users’ assets.

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