New York, NY, January 24, 2023 — FTX warning signs, missed opportunities to identify issues, and ways to strengthen diligence moving forward. Since 2017, dar has been carrying out central crypto exchange controls, including ftx, for its institutional clients., an industry-leader in cryptocurrency exchange vetting, today is sharing its reflections on
"The failure of ftx provides a rare opportunity for the digital asset industry to redefine and improve standards of care for trade and other counterparties," said Doug Schwenk, Managing Director of dar. "We then looked at what has happened in our diligence, what we have failed to do, and how we can bring the industry to higher standards.”
Each quarter,process identifies Vetted Exchanges that meet institutional standards and Watchlist Exchanges that may qualify for future inclusion. Before the breakdown, ftx.com was a surveillance list, while ftx us and liquid have been classified as controlled exchanges after communicating with insiders have indicated that they function as independent entities with appropriate policies and transparency.
In the course of its monitoring, dar has reported a number of warnings concerning ftx.com, including:
1. Know Your Customer and Anti-Money Laundering policies.
2. the search for alameda as an affiliate without disclosing the manner in which conflicts of interest were dealt with.
3. the chip and the risks involved.
4. the reluctance of ftx and its entities to confirm some public due diligence information.
5. lack of transparency and tone of ftx.com.
In retrospect, the CAD has identified a few missed opportunities related to the FTX assessment:
1. Assign the refusal of FTX.com and FTX US to answer the immaturity due diligence questions instead of an attempt to avoid the exam.
2. a delayed response to the departure of Brett Harrison as CEO of FTX Us, rather than a key leadership change leading to an immediate re-evaluation.
3. a slow reaction to the freeze on customer withdrawals due to the assumption that a binary transaction would restore order.
4. underestimated the potential for affiliation with ftx.com and ftx us.
5. Overweight ftx market share and robust market presence.
Moving forward, dar uses the information discovered during its reassessment of the FTX situation to develop and improve its price risk assessment frameworks, reputational risk, and the counterparty risk involved in crypto exchange. Dar is independent and impartial during the entire due diligence process.
More in-depth information on DAR andis available.
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