• FTX, a disgraced cryptocurrency exchange, had been one of the largest players in crypto and was set to be rebooted by its new boss John J. Ray III.
• However, interviews with former customers raise questions about whether there is anything worth rebooting due to woefully high latency, bugs in the API traders use to interface with FTX, and coding mishaps.
• The technical side of the exchange was weak since its inception and this could explain why no progress has been made since Ray’s comments two months ago.
Dreams of Rebooting FTX Face Cold Reality
When the new boss of FTX, John J. Ray III, told The Wall Street Journal in January that he was thinking of rebooting the disgraced cryptocurrency exchange, it made a splash in the industry. Before spectacularly collapsing in November 2022, FTX had been one of largest players in crypto markets – especially derivatives trading – raising tantalizing prospects for its former customers as well as Ray himself whose job is to maximize how much money creditors recover.
Technical Weaknesses Revealed
Interviews with people from major trading firms that once did business at FTX indicate however that there may not be much worth bringing back from the ashes. Woefully high latency, bugs in the API traders use to interface with FTX and coding mishaps were all plaguing it according to several former clients who spoke to CoinDesk – making clear that the technical side of the exchange was weak since its inception and thus could explain why no public progress has been made since Ray’s comments two months ago.
The financial woes that ultimately wrecked FTX became clear late last year when a statement from founder Sam Bankman-Fried said “We have identified issues with our risk management systems which have led us to believe our current risk limits are inadequate.” These risks included overleveraged positions on bitcoin futures contracts on rival exchanges such as Binance and Huobi Global as well as loans taken out without proper collateral backing them up or excessive leverage levels. Following this announcement investors fled leading to further losses resulting in bankruptcy filing soon after by parent company Alameda Research LP..
Reaction From Industry
The news caused shockwaves throughout the industry concerning unregulated derivatives exchanges. In an effort to prevent similar situations occurring again regulators began examining what went wrong at FTX including how it managed customer funds and how it regulated itself internally leading many other exchanges including Binance voluntarily registering themselves under FinCen regulations so they can remain compliant with US regulations going forward..
Given these revelations it appears unlikely that any attempts by John J. Ray III will be successful at rebooting all aspects of what was once a thriving platform; however some elements may still be salvageable for future operations if done correctly such as customer service or risk management procedures implemented during its downfall..