Was the FTX debacle predictable? Data shows the lack of transparency in decentralized exchanges made it difficult.
Data transparency has been a focal point for the cryptocurrency industry, but the FTX fiasco has shown that centralized exchanges are not transparent enough. So far, crypto analytics firms are apparently not capable of tracking transactions to help prevent collapses like that of FTX.
Chainalysis, a major blockchain data platform that cooperates with many governments across the world, said there is currently no on-chain tracking tool that can trace funds through a CEX. Despite blockchain analysis so far having limited opportunities in tracking illicit CEX transactions, some monitoring services are trying to prove that the industry may be able to one day prevent issues like the FTX crash.
Van Weert also noted that “it is possible to track exchanges” but that platforms like Coinbase and FTX make it a bit more complex to track incoming coins as they don’t use hot wallets. He added that exchanges are “extremely reluctant to cooperate,” with many of them declining to comment on Whale Alert’s findings for “security” reasons.
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