- According to a report published by John Ray III, the current CEO of FTX, the exchange stored the private keys of the cryptocurrency wallets on Amazon Web Services (AWS).
- According to the CEO of FTX, the consortium has run into trouble due to a lack of proper record keeping and controls in critical areas, including but not limited to management and governance, finance and accounting, as well as digital asset management. , information security and cybersecurity.
- FTX used Quickbooks and Microsoft Excel to manage the company’s accounting.
On April 9 it revealed in a report that the now bankrupt crypto exchange, FTX, stored the private keys of the cryptocurrency wallets in Amazon Web Services (AWS).
It is necessary to emphasize that it is these private keys that give someone ownership of the assets associated with a wallet. It is generally recommended that these be stored offline to reduce the risk of them falling into the wrong hands.
So, with that in mind, the fact that one of the largest crypto exchanges in the world made that mistake is pretty serious.
FTX stored its assets in a disorderly manner
John Ray III, current CEO of FTX who is overseeing the company’s Chapter 11 bankruptcy restructuring, wrote in the most recent court document:
“Debtors have had to overcome unusual hurdles due to FTX Group’s lack of proper record keeping and controls in critical areas, including, but not limited to, management and governance, finance and accounting, as well as digital asset management, information security, information and cybersecurityexplains the document.
Furthermore, he adds that:
“Typically… a business that manages client and investor funds applies readily identifiable records, data sources, and processes that can be used to identify and safeguard estate assets. Not so with the FTX Group”.
Maybe, one of the most worrying aspects is that the crypto exchange used AWS to store its private keys. Especially considering that it is a service that has been violated several times years ago.
But, as if that weren’t enough, the Most of the cryptocurrencies held by FTX were not in cold wallets.
“FTX Group failed to implement basic and widely accepted security controls to protect crypto assets”, states the report.
In this regard, the report accuses FTX executives of lying to the public about the security and storage of assets.
“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.
This implies that FTX knew how a crypto exchange should operate, but still decided to go against it.
Is Quickbooks and Excel enough to manage the accounting of a crypto exchange?
The report not only raised concerns about how the assets were being stored, but also revealed that FTX used Quickbooks and Microsoft Excel to manage the company’s accounting, tools that, although very useful, the report says were used in a disorganized manner and were prone to errors.
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