Here’s how centralized exchanges aim to win back users after FTX collapse

Centralized cryptocurrency exchanges play a major role in the cryptocurrency trading ecosystem. However, the collapse of FTX has shown how difficult it is to trust exchanges with user funds. Despite this, we continue to believe that cryptocurrency trading platforms can regain the trust of the community.

Executives from crypto exchanges OKX, Gate.io and Bitpanda shared with Cointelegraph their insights on how trading platforms can recover from the impact of the FTX debacle.

According to Gate.io executive Dion Guillaume, transparency regarding the custody of user assets has become very important. Guillaume told Cointelegraph that this was also the motivation for their platform to open source their reserves proof method using Merkle tree verification for use by other industry leaders. He explained:

“Over the past two weeks, I think it has become increasingly clear that cryptocurrency exchanges need to operate with greater transparency, especially when it comes to managing user funds and proof of reserves.”

Apart from this, Guillaume believes the industry can recover in time. Pointing to other “black swan” events, the executive noted that the crypto industry has remained resilient over the past decade. We will be stronger,” he added.

Eric Demuth, co-founder and CEO of crypto exchange Bitpanda, has called on exchanges to put their customers first and increase transparency. “They need to stop trying to sell their dreams,” he said. Demus explained:

“We need to stop telling people to trust us and give them a real reason. Investors aren’t stupid and are now more skeptical of the industry than ever before.”

Apart from this, Bitpanda’s CEO believes the space will eventually recover from the effects of the FTX collapse. According to Demuth, there is no quick fix and players left behind in the field must continue to work towards sustainable regulation and a responsible future.

Related: CoinMarketCap Launches Proof of Reserve Tracker for Cryptocurrency Exchanges

Lennix Lai, an executive at crypto exchange OKX, echoed the sentiment on transparency. According to Lai, transparency is key in rebuilding user trust. Executives stressed the need to take action on both the retail and organizational fronts.

In retail, Lai noted the importance of allowing users to self-certify that their assets are 100% backed by reserves. On the organizational side, executives noted that organizations need to find ways to give their clients greater visibility.

“This self-authentication feature means there is no way for us to mix user funds, even if we wanted to, because we operate with complete transparency.”

Apart from this, OKX executives also stressed the importance of self-management. Lai said their company believes in the motto “It’s not your key, it’s not your cipher.” He said the trading platform encourages users to self-manage their assets.