Three Years After FTX’s Collapse, Creditors Wait as the Industry Rebuilds Trust
Imagine the crypto market in late 2022: billions evaporating overnight as one of the largest exchanges implodes, leaving users scrambling and regulators scrambling faster. On November 11, 2022, FTX filed for bankruptcy, triggering a crisis of confidence that rippled through centralized platforms and beyond. This event not only erased market liquidity but also forced the industry to confront its vulnerabilities, leading to a wave of reforms aimed at restoring trust.
CEXs Forced to Adjust Post-FTX
Centralized exchanges (CEXs) felt the immediate brunt of the fallout. In the weeks following the bankruptcy, users withdrew over $20 billion from major platforms, according to CoinGecko data. To stem the panic, exchanges rushed to publish proof-of-reserves (PoR) attestations to prove their solvency. Binance led the charge, releasing its first report on November 10, 2022, followed by a Merkle Tree-based verification for Bitcoin (BTC) holdings a few days later. Platforms like OKX, Deribit, and Crypto.com followed suit amid fears of contagion. These efforts provided snapshots of reserves but faced scrutiny for lacking continuous audits. David Gokhshtein, a prominent X user, criticized the approach, stating, “When you aren’t showing the company’s liabilities, it means nothing.” Thomas Perfumo, Kraken’s global economist, echoed the sentiment to Cointelegraph, noting that the “hard lessons of the past were never an indictment of crypto,” but emphasized that the debacle underscored the importance of governance and integrity. Decentralized finance (DeFi) protocols also evolved, prioritizing transparency and self-custody. Eddie Zhang, president of dYdX Labs, told Cointelegraph, “We’ve seen a notable shift.” He highlighted stronger risk frameworks and more sophisticated governance in DeFi, enabling systems to better withstand market shocks.
Creditors Still Waiting for Closure
Despite these advancements, FTX creditors continue to grapple with incomplete recoveries. As of a November 9 update from creditor representative Sunil Kavuri, the exchange has distributed $7.1 billion across three rounds. The first, in January, paid $454 million to small claimants under $50,000. A $5 billion payout followed on May 30, and September 30 saw $1.6 billion disbursed. The next is slated for January 2026, though unconfirmed. FTX’s total recovered assets reached about $16.5 billion by October 2024. However, repayments in U.S. dollars rather than crypto mean creditors miss out on the market rebound—Bitcoin traded at $16,797 post-bankruptcy and hit around $103,000 by November 12, 2025. Kavuri estimated real recovery rates at 9% to 46% when adjusted for current prices.
SBF Looks for a Lifeline
Former FTX CEO Sam Bankman-Fried (SBF) is serving a 25-year sentence for fraud and conspiracy. He appealed his conviction, claiming denial of the presumption of innocence and exclusion of evidence showing FTX’s solvency in November 2022. His team argued this before the U.S. Court of Appeals for the Second Circuit on November 4. Prediction market Polymarket gives only a 4% chance of a presidential pardon in 2025. Caroline Ellison, former Alameda Research CEO who cooperated with prosecutors, began her sentence in late 2024 and is due for release in mid-2026. The FTX saga’s legacy includes the U.S. GENUIS Act and the EU’s Markets in Crypto-Assets Regulation, pushing for better oversight. As the industry matures, these changes aim to prevent repeats, but for many creditors, full closure remains elusive. How might ongoing regulatory reforms like the GENUIS Act shape your approach to using centralized exchanges today?
