Three Years After FTX’s Collapse: Creditors Still Wait, Crypto World Shakes Itself Off

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Ah, November 11, 2022 – the day FTX collapsed and proved once again that “too big to fail” was the world’s most laughable phrase. The great cryptocurrency catastrophe wiped out billions, leaving a digital trail of tears and a crater in market liquidity. And as for trust in centralized exchanges? Let’s just say, it was vaporized faster than an unbacked token.

FTX’s bankruptcy wasn’t just a minor hiccup – it was the atomic bomb that detonated the fragile ecosystem of crypto. And, oh boy, did it send regulators scrambling like rats in a sinking ship. The world was suddenly awake to the need for transparency. And why not? Who wouldn’t want to know exactly where their crypto was, especially when it wasn’t in their own pocket?

Three years later, and transparency in crypto is all the rage. We have proof-of-reserves (PoR), audits, and fancy on-chain analytics flying around. But let’s be real, most of it’s just window dressing. A work in progress, much like the broken promises of FTX itself. And let’s not forget the creditors, who are still waiting for their ‘refunds.’ It’s like the world’s most frustrating waiting room, except instead of a cup of coffee, they get a backseat to the blockchain’s future.

CEXs Forced to Adapt (or Die) Post-FTX

So, what happened to the mighty centralized exchanges after the FTX implosion? They scurried to prove they weren’t the next disaster waiting to happen. In the weeks following FTX’s bankruptcy, over $20 billion vanished from major platforms. Poof. Gone. How’s that for a vote of no confidence?

In a classic move, exchanges like Binance jumped on the PoR bandwagon, but let’s be honest, this was more of a desperate Hail Mary than an act of faith. On November 10, 2022, Binance dropped its first PoR report. A few days later, it released another, this time based on a Merkle Tree. But wait – didn’t we all learn from FTX that a snapshot is not a solution? It’s like showing off your beach body in a photo, only to realize that you haven’t been to the gym in years.

But hey, let’s give them credit. Binance and other exchanges like OKX, Deribit, and Crypto.com did their best to reassure nervous users, publishing PoR reports in a race against fear. Still, as David Gokhshtein pointed out on X (formerly Twitter), this was basically a “show me the liabilities” moment. Without full transparency, proof-of-reserves is just another meaningless buzzword.

Thomas Perfumo from Kraken, meanwhile, tried to put a positive spin on the situation. “It’s not crypto that’s the problem,” he said. Yeah, sure, Thomas. Keep telling yourself that. FTX’s debacle only proved what we all suspected: Governance is what matters. Because who doesn’t want to trust a system that looks like it’s governed by a frat house?

Meanwhile, Decentralized Finance (DeFi) took the opportunity to say, “Well, if you can’t trust the exchanges, maybe trust yourself?” They argued for self-custody, which is like saying, “If you don’t want your food poisoned by a chef, why not just cook your own dinner?”

And so, according to Eddie Zhang of dYdX Labs, DeFi is now ‘stronger,’ ‘smarter,’ and ‘more resilient.’ Well, we’ll see how long that lasts when the next market shock hits.

Creditors Still Waiting for Their Crypto Reprieve

But let’s talk about the people who really got the short end of the stick here: the creditors. Despite all the post-collapse transparency campaigns and new regulations (hello GENIUS Act and EU Markets in Crypto-Assets Regulation), some FTX creditors are still sitting there like an abandoned puppy. FTX has disbursed a grand total of $7.1 billion in repayments, but if you’re expecting a quick recovery, you might want to adjust your expectations.

In January, FTX kicked off the repayment process with $1.2 billion. Nice, right? Except only $454 million made it to the small-time claimants. The rest? Just a glimmer in the eyes of those waiting for their shot at glory.

Then came the $5 billion payout in May, followed by another $1.6 billion in September. But here’s the kicker: creditors are getting cash repayments, not crypto. And that means they’ve missed the rebound of the crypto market. If you had crypto assets in 2022, you’re kicking yourself now as Bitcoin soars from its post-bankruptcy low of $16,797 to over $103,000. What a time to be alive. The creditors’ recovery rate could be as low as 9%, which, let’s face it, is just sad.

SBF Seeks a Hail Mary

As for Sam Bankman-Fried, the once-mighty CEO of FTX, he’s doing what any self-respecting fraudster would do: appealing his conviction. Sam argues that he wasn’t given a fair shake, but considering the fact that he’s serving a 25-year sentence for fraud and conspiracy, it’s safe to say the courts don’t exactly agree with him.

In fact, the chances of a pardon? A mere 4%. Yeah, that’s the kind of odds you bet your crypto on. Caroline Ellison, former Alameda Research CEO, who cooperated with prosecutors, is set to serve her sentence with a planned release in mid-2026. Can’t wait to see who’s still around to cheer for her release!

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2025-11-11 23:50