After the collapse of the FTX cryptocurrency exchange, an industry commentator has warned investors that now is the time to "get your m...

'Get your money off exchanges', warns Bitboy Crypto after FTX scandal #1

After the collapse of the FTX cryptocurrency exchange, an industry commentator has warned investors that now is the time to "get your money off exchanges".

The Crypto Mile checked in with Ben Armstrong, aka BitBoy Crypto, who had drawn attention to smoke rising from FTX weeks before the current chaos, drawing ridicule from sections of the crypto-media.

But, after Coindesk journalist Ian Allison blew the lid on the irregularities in Alameda Research's balance sheet, the smoke became an inferno.

The balance sheet revealed that the $14.6bn (£12bn) of assets held by Alameda Research was heavily stacked with a large proportion of FTX's own FTT token (FTT-USD).

With outstanding liabilities of an estimated $5.1bn at Alameda Research, holders of FTT experienced rising panic that margin calls on those loans might decimate the value of FTT.

A bank-run ensued, inflamed by warning tweets from Binance CEO Changpeng 'CZ' Zhao.

With feelings of distrust towards centralised exchanges at an all time high, Yahoo Finance UK asked Armstrong what he thinks investors should do to ensure their digital assets are safe.

He advised: "Get your money off exchanges, there's no question about that. Anyone who is just being lazy saying they'll get to it in the future, you are the people who will lose the money.

"I opened up a Trust Wallet account and moved all my Cardano (ADA-USD) over to it, and I've a Coinbase Wallet that I've sent funds to also."

A Trust Wallet and Coinbase Wallet are examples self-custody crypto storage devices, or cold-storage wallets, that place control of crypto, keys, and data in the hands of the owner, not a centralised exchange.

Renewed interest in cold-storage wallets has been reflected in Trust Wallet's token price (TWT-USD) appreciating in recent weeks, whilst the majority of the rest of the market has tanked. The cryptocurrency has increased by 6.4% in the past week to $2.12 per coin, according to Coingecko.

The problem with centralised crypto exchanges (CEXs) Centralised exchanges have acted as a substitute for banks in the largely unregulated and experimental crypto-sector.

Since the FTX collapse, these banks look more like casinos, with FTX playing against unwitting customers using the customers' own cash.

Throughout the crypto bull-market that reached a high-water mark in Novemeber 2021, both retail and institutional investors left their money with centralised entities that promise funds are always backed-up and insured, but promises have been broken again and again.

Since the collapse of Terra's UST/Luna stablecoin (LUNA1-USD) and the crypto crash in May, the industry has witnessed big names laid low — Three Arrows Capital, Voyager (VYGVQ), and now FTX.

Investor frustration and disbelief is met with the same "sorry, due to unprecedented market conditions, your money is gone" response. But where is the hole in the system that keeps draining away supposedly secure assets?

A month before the FTX collapse, Armstrong released a video on YoutUbe to alert his listeners.