Ripple CTO names 3 reasons for the collapse of the FTX cryptocurrency exchange

Ripple’s chief technology officer listed three main factors that, in his opinion, led to the downfall of the FTX crypto empire.

David Schwartz claims that Alameda Research, a trading company associated with the crypto exchange, used customer funds, which, according to him, was the main reason for the FTX collapse.

The second reason, Schwartz said, was the deliberate mixing of FTX’s client deposits and funds that Alameda could have used for high-risk investments. In response to claims from the new FTX administration, its former CEO Сем Бенкман-Фрід" href="https://noworries.media/biography/sem-benkman-frid/" data-bio-id="3697">Sam Bankman-Fried began to claim that the assets were combined out of «ignorance» and denies any fraud.

The third reason is that despite the fact that Alameda committed to using risk management procedures, bringing their impact to a neutral level, in practice it did not manage risks at all. According to Schwartz, the only way to prevent cryptocurrency executives from making the mistakes made by the former FTX CEO is to implement an automated system of checks and balances.

Yesterday, Schwartz warned XRP cryptocurrency holders about the growth of phishing emails from hackers trying to steal an asset issued by his company.