News21 November

Vitalik Buterin said the FTX crash was a consequence of people's actions, not a problem with the technology itself


Ethereum co-founder Vitalik Buterin rolled out his thoughts after one of the most significant events in cryptocurrency - the collapse of FTX.

Buterin acknowledged that the underlying stability of decentralization that powers the crypto-asset economy is not in question. The problem in this case (and several previous ones) was people, not technology.

Vitalik supported the position of many members of the Ethereum community regarding centralization:

"That said, many members of the Ethereum community also see this situation as a confirmation of what they have believed all along: everything centralized by default is suspect."

Also this weekend, Vitalik released guidance on the CEX (centralized exchange), which has evidence of "insolvency." 

In addition, Buterin said that instead of relying solely on "fiat methods," such as government licenses, auditors, corporate governance, and investigations into the biographies of people running exchanges, exchanges can create "cryptographic evidence that shows that the funds they hold are sufficient to cover liabilities to users."

FTX's problems are believed to have arisen because the exchange used customer deposits to invest in projects. After the exchange received an enormous flood of withdrawal requests earlier this month, it could not meet these user requests with the available liquidity. 

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