Vitalik Buterin Hits at FTX Failings, Backs Ethereum’s Model

• Buterin contrasts Ethereum’s open governance with FTX’s centralization to show safety.
• SBF’s team renews debate with solvency claims, intensifying questions over FTX governance.
• FTX’s collapse led to rising DEX adoption, supporting Ethereum’s community model.

At Devconnect Argentina, Ethereum co-founder Vitalik Buterin criticized FTX and contrasted its centralized structure with Ethereum’s decentralized model. The remarks, delivered in Buenos Aires, focused on how the exchange collapsed under decisions made by a few insiders. Buterin addressed the crowd to explain why he believes Ethereum’s open and community-run process avoids those risks.

Centralization at FTX 

Buterin opened his talk by showing Sam Bankman-Fried’s past public quote about wanting to create global good and then argued that FTX operated in the opposite direction. He stated that the exchange relied on trust in a small leadership circle, which left users exposed to decisions they could not see. This point led him to frame FTX as the reverse of Ethereum’s “can’t be evil” design.

The discussion then changed to FTX’s structure and the events that followed its collapse. According to court findings, FTX secretly sent billions of dollars in customer funds to Alameda Research to cover trading losses. 

These decisions led to wider damage across several platforms and ended with Bankman-Fried receiving a 25-year sentence for fraud, money laundering, and conspiracy. This context helped Buterin support his argument about how centralization increases systemic risks for users.

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

His team argued that they faced a temporary liquidity crunch and blamed external legal counsel for accelerating the bankruptcy process. This dispute added scrutiny to long-standing questions about governance failures at centralized exchanges.

Ethereum Community-Driven Governance Model

Buterin used those details to contrast Ethereum’s development method. He explained that Ethereum relies on proposals reviewed and debated openly by builders and users. He said this structure limits reliance on a single authority and keeps decision-making transparent. 

Each upgrade moves through a public process that includes scrutiny, testing, and community input. This comparison guided the conversation toward investor behavior. Buterin noted that distrust in centralized exchanges has grown since the FTX collapse. 

He pointed to rising activity on decentralized exchanges, including platforms like Hyperliquid, which launched after the FTX failure. According to Hyperliquid founder Jeff Yan, the collapse gave users a clear reason to seek systems where trust in a single operator is not required.

The rise of decentralized exchanges connected directly to Ethereum’s broader vision. Buterin emphasized that Ethereum works as a community rather than a company. He explained that companies operate through hub-and-spoke systems with power concentrated in the center, while communities distribute responsibility across many participants. He said this difference creates a structure where no single group can quietly take actions like those exposed at FTX.

Related: Judges Question Sam Bankman-Fried’s Bid to Reverse FTX Conviction

FTX Claims Lead to New Tension

The statements from Bankman-Fried’s team also added new scrutiny to the discussion. Their document said the exchange owed $8 billion to customers and insisted those funds “never left.” 

They further claimed that 98% of creditors have received 120% repayment and that remaining payouts may reach up to 143%. They added that the estate still holds $8 billion after legal fees and repayments.

These claims were similar to Bankman-Fried’s earlier comments in an interview with Tucker Carlson from prison. He said FTX had “enough money” to repay users and pointed to panic withdrawals as the trigger for the collapse. However, the jury verdict and court records documented the misuse of customer funds, which drove the case toward its final outcome.

Meanwhile, Vitalik Buterin’s critique placed FTX on the centralization debate in crypto. His remarks compared Ethereum’s public decision-making with the closed structure that led to FTX’s downfall. The ongoing claims from Bankman-Fried’s camp add more questions to these governance issues.