The recent ruling of a U.S. bankruptcy court to allow the sale of crypto exchange FTX's LedgerX has been a step forward in FTX's bankruptcy proceedings and the potential to repay investors who had lost funds in the crash of the crypto exchange in 2022. The news of the sale comes after a period of extensive examination into the failure of the entity by the Commodity and Futures Trading Commission (CFTC). Through the investigations, FTX's LedgerX was found largely to be healthy, solvent and operational.

The root cause of the failure of the exchange appears to have some relationship with former FTX Sam Bankman-Fried, who currently faces charges of illegally transferring customer funds and violating U.S. campaign finance laws. SBF is currently under a great deal of scrutiny and is confined to his parents’ home in California.

What does this mean for the trustworthiness of crypto exchanges? Despite the failure of FTX, it is worth noting that the LedgerX business was largely a separate entity from FTX itself. This calls into question the larger reliability of such exchanges. It becomes very important for consumers of crypto services to research the entity that they are transacting with in order to ensure that their funds are safe.

Due diligence is needed to determine the safekeeping policies of an exchange, such as the level of insurance coverage and any other mitigating factors taken. It is also important to research the track record of its executives and what regulations the exchange is compliant with. All these measures should help to increase the trustworthiness of the exchange for conducting crypto transactions. When in doubt, users should make sure to ask questions and keep in touch with customer support.



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