What can CEXs do to rebuild trust after the FTX crash?
Crypto exchanges must regain user trust by becoming more transparent and adopting measures to prevent fund misappropriation. The rapid collapse of FTX, once the world’s second-largest crypto exchange, followed by the collapse of Celsius, has undermined trust in centralized crypto services. The industry’s short history has shown that hacking attacks and fund misappropriation are the two leading causes behind centralized crypto exchanges (CEXs) crashing or losing clients. If FTX represents the worst example of fund misappropriation, Mt. Gox — a Japan-based crypto exchange that accounted for over 70% of all crypto transactions at its peak in 2014 — is the worst example of how a hacking attack can lead to failure. While CEXs have played a key role in crypto adoption, the ongoing trust crisis doesn’t bode well for the crypto industry. The fear of becoming the next victim of a CEX failure has prompted many investors to consider decentralized exchanges (DEXs). The DEX vs. CEX inflow ratio ...