Lessons From the FTX Collapse

FTX, a popular cryptocurrency exchange, filed for bankruptcy protections earlier this month. Industry voices continue excoriating FTX CEO Sam Bankman-Fried, as the circumstances surrounding its collapse begin to smack of naked fraud. One of the most important lessons from FTX collapse is self-custody – the concept of holding your cryptocurrency portfolio in a digital wallet that you control. Prior to the FTX collapse, more and more retail investors had been making the move to self-custody. Per CoinTelegraph:

On-chain exchange flow data is showing a surge in withdrawals to self-custody wallets, according to analytics provider Glassnode. In a Nov. 13 post on Twitter, Glassnode reported that Bitcoin exchange outflows had hit near historic levels of 106,000 BTC per month.It added that this has happened only three other times — in April 2022 and November 2020, as well as in June/July 2022.