We deep dive into the trust and transparency emails sent out by crypto exchanges following FTX’s colossal breakdown.
If you are a crypto holder, every exchange you have ever engaged with likely sent you an email in the days following FTX’s shocking collapse. FTX and its once illustrious leader, Sam Bankman-Fried (SBF), shattered the trust of the crypto sphere after filing for bankruptcy earlier this month.
FTX was one of largest and seemingly, most trusted crypto exchanges in operation. Celebrities like Tom Brady, Larry David and Shaquille O’Neil worked as brand ambassadors for the company, furthering FTX’s image as a legitimate and profitable exchange. In 2021 and 2022, FTX signed major sports marketing deals with the Miami Heat, the Golden State Warriors, UC Berkeley, Major League Baseball, among others – all which have since suspended their deals. FTX’s carefully constructed facade made it all the more shocking when the curtain fell, revealing an exchange built atop a delicate house of cards tantamount to Luna and TerraUSD.
In Satoshi Nakamoto’s original bitcoin whitepaper, the goal of blockchain technology is to secure cryptocurrency transactions via cryptographic proof, “without the need for a trusted third party.” And that is exactly what decentralized exchanges do: cut out the middleman and function as a peer-to-peer exchange based entirely on smart contracts. The gross mismanagement of customer funds has called into question the legitimacy and credibility of centralized brokers and exchanges, which operate as the “trusted” middleman. Notable crypto figures, like Binance’s CZ and Michael Saylor have urged investors and traders to self-custody their assets amid market uncertainty. Nakamoto’s design eliminated the need for trust – corruption within centralized exchanges demonstrates why.
In an effort to rebuild the trust that FTX fractured, most crypto exchanges sent emails reassuring customers: their funds are safe and secure; their hubris doesn’t outpace their fiscal and technical capabilities; and customer funds are never misused. We analyzed trust and transparency emails from 14 different crypto exchanges and here is what we found.
This analysis focuses explicitly on the content within these emails, and not policies overall. For a comprehensive overview of each exchange’s policies, please visit their website.