Decentralized v. Centralized finance: Who’s to blame for FTX exchange collapse


  • Decentralized exchange dYdX’s founder Antony Juliano believes the solution to the collapse of centralized exchanges is DeFi. 
  • Juliano stresses that decentralized exchanges can be audited much quicker than centralized entities and there is higher transparency. 
  • FTX exchange crash triggered a bloodbath in cryptocurrencies and dYdX founder argues this could have been avoided using DeFi. 

The debate between decentralized and centralized exchanges turned serious with the recent collapse of Samuel Bankman-Fried’s FTX exchange. Antony Juliano, founder of decentralized exchange dYdX believes the FTX crash could have been avoided if traders used DeFi instead of centralized entities. 

Also read: Crypto lender BlockFi prepares for potential bankruptcy in the aftermath of FTX collapse

Are decentralized exchanges the answer to crypto traders’ woes?

Crypto traders suffered losses from the collapse of Samuel Bankman-Fried’s (SBF) FTX exchange collapse. Antony Juliano, the CEO and founder of decentralized exchange dYdX believes that the problem is the failure of centralized exchanges. 

FTX’s collapse started with a lack of transparency and guard rails. In DeFi, platforms are built on top of smart contracts. A smart contract is simply a program stored on a blockchain that runs when predetermined conditions are met. Juliano explained that dYdX offers similar products as centralized exchange FTX, the only difference is the ease of use and accessibility. 

dYdX smart contract statistics

dYdX smart contract statistics

Centralized exchanges offer better accessibility to users while their decentralized counterparts provide better security. The safety of user funds has emerged as a leading cause of concern among traders. dYdX witnessed an increase in inflow of new users and funds following the FTX collapse. 

Juliano was quoted on Bloomberg crypto show, saying:

The initial knee-jerk reaction is to regulate and potentially over regulate the [DeFi] industry, but for a lot of regulators, not only can it be positive but it can be ten times better than the existing financial system.

Turf wars between US regulators need to end

US financial regulators, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), are competing to regulate cryptocurrencies. Experts argue that crypto regulation is the purview of the CFTC. However, the SEC has continued its regulation of crypto projects and firms using  enforcement throughout 2022. 

Janet Yellen, US Treasury Secretary, believes that the FTX exchange collapse has exposed the “weaknesses” in crypto. At the same time, there was no regulation to tackle the liquidity crisis of FTX or prevent the collapse from wiping out billions in digital assets. This event stresses the need to regulate  cryptocurrencies and crypto-related centralized and decentralized entities. 


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended Content

Editors’ Picks

Crypto Today: BNB, OKB, BGB tokens rally as BTC, Shiba Inu and Chainlink lead market rebound

Crypto Today: BNB, OKB, BGB tokens rally as BTC, Shiba Inu and Chainlink lead market rebound

Cryptocurrencies sector rose by 0.13% in early European trading on Friday, adding $352 million in aggregate valuation. With BNB, OKB and BGB attracting demand amid intense market volatility, the exchange-based native tokens sector added $1.9 billion.

More Cryptocurrencies News
US SEC may declare XRP a 'commodity' as Ripple settlement talks begins

US SEC may declare XRP a 'commodity' as Ripple settlement talks begins

The US SEC is considering declaring XRP as a commodity in the ongoing settlement talks with Ripple Labs. FOX News reports suggest Ethereum's regulatory status remains a key reference for XRP’s litigation verdict.

More Ripple News
Cardano Price Prediction: ADA could hit $0.50 despite high probability of US Fed rate pause

Cardano Price Prediction: ADA could hit $0.50 despite high probability of US Fed rate pause

Cardano price stabilized above $0.70 after posting another 5% decline in its 3rd consecutive losing day. Multiple ADA derivatives trading signals are leaning bullish, but the US trade war impact outweighs the positive shift in inflation indices. 

More Cardano News
Stablecoin regulatory bill receives green light during Banking Committee hearing

Stablecoin regulatory bill receives green light during Banking Committee hearing

The US Senate Banking Committee voted on Thursday to advance the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, which aims to establish proper regulations for stablecoin payments in the country.

More Cryptocurrencies News
Bitcoin: BTC at risk of $75,000 reversal as Trump’s trade war overshadows US easing inflation

Bitcoin: BTC at risk of $75,000 reversal as Trump’s trade war overshadows US easing inflation

Bitcoin price remained constrained within a tight 8% channel between $76,000 and $84,472 this week. With conflicting market catalysts preventing prolonged directional swings, here are key factors that moved BTC prices this week, as well as key indicators to watch in the weeks ahead. 

Read full analysis
The Best brokers to trade EUR/USD

The Best brokers to trade EUR/USD

SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.

Read More

BTC

ETH

XRP