Custody After FTX & Celsius — Lessons Learned

The collapses of FTX and Celsius in 2022 were watershed moments for Bitcoin custody. Billions in customer assets vanished. The lessons are clear and permanent.

What Happened

FTX, once valued at $32 billion, filed for bankruptcy in November 2022. Customer funds had been commingled with Alameda Research. Users who trusted FTX lost access to their assets. Celsius, a crypto lending platform, froze withdrawals in June 2022 and filed for bankruptcy shortly after. Both cases shared a common factor: users trusted a single entity with their Bitcoin.

The Core Lesson

Counterparty risk is the single greatest threat to your Bitcoin. Not hacking, not market volatility — the risk that the entity holding your Bitcoin fails, steals, or mismanages it.

What Changed

Post-FTX, the industry has shifted toward: - Proof of reserves — Verifiable evidence that custodians hold what they claim - Segregated accounts — Customer assets kept separate from company operations - Multi-custodian models — Distributing across multiple independent entities - Self-custody growth — Hardware wallet sales surged after FTX

How to Protect Yourself

The safest approach combines regulatory oversight, insurance, and diversification. Whether you self-custody, use a qualified custodian, or choose multi-institution custody, the key is eliminating single points of failure.