Adam Back argues crypto exchanges repeatedly fail to separate custody from trading, repeating decades-old fraud patterns seen at Mt. Gox and FTX.
Regulation & Gov ·
At BTC Prague 2026, Adam Back argued that crypto exchanges continue to replicate fraud patterns from Mt. Gox and FTX by failing to separate custody functions from trading operations. He contended that traditional financial markets have evolved mechanisms to absorb stress and prevent contagion, whereas the crypto industry repeats mistakes spanning centuries despite having access to those historical lessons.
Back identified custody separation as a critical safeguard: if users could move assets freely when an exchange faces failure, they would not face forced inclusion in bankruptcy proceedings. Instead, the same structural vulnerabilities that enabled past exchange collapses continue to appear across the industry.
The claim rests on the observation that crypto exchanges have not adopted custody-trading separation as standard practice. What remains unclear is whether Back specified which current exchanges exemplify this problem, what timeline he envisions for industry reform, or what regulatory or technical mechanisms might enforce such separation.