Reading FTX Interim Failure Report.....they made all the errors a beginner would make

As part of the bankruptcy proceedings, the appointed CEO has been trying to get an understanding of the dumpster fire that is FTX.

You're probably familiar with these headlines:

FTX Confirms $9 Billion in Customer Funds Vanished

A timeline of cryptocurrency exchange FTX's historic collapse

So they investigate and find out why things went south. They issue a report saying what they found, the first cut having now been released. Found here The pdf is called Notice of filing first Interim Report.

It reads like a first timer coming into crypto,

1.They stored their keys online or on their computers

The FTX Group stored the private keys to its crypto assets in its cloud computing environment, which included over one thousand servers and related system architecture, services, and databases that it leased from Amazon Web Services (the “AWS account”).

Despite the well-understood risks, private keys and seed phrases used by FTX.com, FTX.US, and Alameda were stored in various locations throughout the FTX Group’s computing environment in a disorganized fashion,

2.They stored it all in Hot Wallets

First, the FTX Group kept virtually all crypto assets in hot wallets, which are far more susceptible to hacking, theft, misappropriation, and inadvertent loss than cold wallets because hot wallets are internet-connected.

3.They didn't use MFA

Second, the FTX Group failed to employ multi-signature capabilities

4.They didn't protect API permissions

First, while it is widely recognized that sensitive data should be protected through encryption and appropriate access controls, the FTX Group failed to adopt these basic controls to secure its “application secrets,” that is, the highly sensitive data such as passwords, API keys,39F 40 and private keys used by its applications.

5.They didn't understand their open positions

Alameda often had difficulty understanding what its positions were, let alone hedging or accounting for them.

All the things that get repeated often here. Yet this was with billions and billions of dollars and people who should of cared.