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The Problems of Cryptocurrency Thefts and Exchange Shutdowns

In: The Cryptocurrency Market

Author

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  • Usman W. Chohan

    (Economic Affairs and National Development)

Abstract

The chapter aims to draw attention to the gap between cryptocurrency-related rhetoric (a “trustless” environment) and the praxis (requiring human agency and good faith in community). Through the prism of cryptocurrency exchanges, and deploying extitutional theory, the chapter offers a case study of FTX/Alameda (cryptoexchange), to argue that trust-building is a delicate endeavor that requires a great many decentralized participants to operate in good faith toward fostering communities of prosperity and exchange. It draws the contrast between the cryptoanarchist ideals of cryptocurrency stalwarts on the one hand, and the desecration of users’ trust by FTX that ultimately led to its collapse in 2022 on the other. This is then seen in the context of a litany of failed cryptoexchanges since 2018, demonstrating a problem of human agency at the level of commerce (at the exchanges) that is both extitutional and institutional in nature. The findings of the chapter suggest that cryptoexchanges must remain an area of focus because their breaches of trust, their thefts and shutdowns, all pose risks to the wider flourishing of cryptocurrency markets.

Suggested Citation

  • Usman W. Chohan, 2025. "The Problems of Cryptocurrency Thefts and Exchange Shutdowns," Palgrave Studies in Financial Services Technology, in: Ali Saeedi & Anas Al-Fattal (ed.), The Cryptocurrency Market, chapter 0, pages 69-86, Palgrave Macmillan.
    • Handle: RePEc:pal:psincp:978-3-031-90542-1_4
    DOI: 10.1007/978-3-031-90542-1_4
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