Vitalik Cites FTX to Stress Ethereum Governance Gap

Buterin says FTX collapsed due to centralized control, contrasting it with Ethereum’s community-driven, transparent governance.

Post-FTX distrust boosted decentralized exchange activity, with platforms like Hyperliquid gaining traction.

Claims from Bankman-Fried’s camp about asset levels and repayments reignited debate despite court findings of fund misuse.

Ethereum co-founder Vitalik Buterin used his November 17 appearance at Devconnect Argentina in Buenos Aires to contrast Ethereum’s decentralized structure with the centralized decisions that led to FTX’s collapse. He addressed participants to explain how the failed exchange relied on trust in a small leadership circle and why that approach, in his view, worked against Ethereum’s open governance model.

Focus on FTX’s Centralized Failures

Buterin began by referencing a past statement by Sam Bankman-Fried about building global good. He said FTX operated under the control of a few insiders, which left users dependent on decisions they could not verify

According to court findings, FTX moved billions of dollars in customer funds to Alameda Research to cover losses. These actions created widespread fallout across trading platforms. Bankman-Fried later received a 25-year sentence for fraud, money laundering, and conspiracy.

However, the issue resurfaced when an account linked to Bankman-Fried posted a 14-page document on X. The document claimed FTX held $25 billion in assets against $13 billion in liabilities at the time of bankruptcy

His team stated the exchange faced a temporary liquidity crunch and blamed external legal counsel for accelerating the bankruptcy filing. This dispute added new attention to governance issues at centralized exchanges.

Ethereum’s Community-Run Decision Structure

Buterin used these details to explain Ethereum’s approach. He said Ethereum relies on publicly reviewed proposals instead of a single authority. As a result, each upgrade moves through open debate, testing, and broad input

He noted that distrust in centralized exchanges increased after the FTX failure. Activity on decentralized exchanges rose, including platforms such as Hyperliquid, launched after the collapse. Hyperliquid founder Jeff Yan said the event pushed users toward systems that do not require trust in one operator.

Claims From FTX’s Camp Add Further Pressure

Statements from Bankman-Fried’s team continued to draw interest. They said FTX owed $8 billion to customers and insisted the funds “never left.” They also said 98% of creditors received 120% repayment and that remaining payouts could reach 143%

They added that the estate holds $8 billion after repayments and legal costs. These claims matched Bankman-Fried’s earlier comments in a Tucker Carlson interview. Court records, however, documented the transfers that shaped the case. Meanwhile, Buterin’s remarks placed the FTX collapse inside the wider debate over centralized control in crypto.

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