The disgraced crypto exchange had no dedicated cyber staff and 'protected' users assets with minimal safeguards.
Common wisdom suggests that companies keep just as much crypto in hot wallets as necessary to keep accounts liquid, while the rest of the crypto should be kept in cold storage. However, FTX didn’t do that; instead, the report says it kept “virtually all” of its customers’ assets in hot wallets.Did FTX not know that cold storage was more secure or something? Nope, worse than being too stupid to implement proper controls, the exchange’s leadership appears to have just not given much of a shit.
“The FTX Group undoubtedly recognized how a prudent crypto exchange should operate, because when asked by third parties to describe the extent to which it used cold storage, it lied,” the report states, listing off a number of examples in which FTX executives—including SBF—claimed that they kept users’ assets in cold storage.
According to the report, this was part and parcel of a generally disorganized approach to security, in which “private keys and seed phrases used by FTX.com, FTX.US, and Alameda were stored in various locations throughout the FTX Group’s computing environment in a disorganized fashion, using a variety of insecure methods and without any uniform or documented procedure.
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