By Linda Athanasiadou, expert in fraud and scam prevention, audit, anti-money laundering (AML)
The fall of FTX wasn’t just a cryptocurrency failure — it was a global wake-up call. One of the most well-funded, high-profile crypto exchanges in the world unraveled almost overnight, not because of complex market forces, but due to basic, preventable failures in governance, auditing, and AML controls.
For those of us who work in the trenches of fraud prevention and financial compliance, the FTX story isn’t a surprise. It’s a confirmation of what happens when hype overshadows accountability. If you're looking for a Linda Athanasiadou alerton why regulatory structure matters — FTX delivers it in full.

What Really Went Wrong?
At its core, FTX operated without meaningful internal oversight. There were no robust accounting systems, no functioning compliance department, no independent board, and no separation of funds between the company and its hedge fund arm, Alameda Research.
Millions of dollars were allegedly funneled through a web of informal relationships and opaque entities. Company leadership — including founder Sam Bankman-Fried — made massive decisions with little to no documentation, no approval processes, and no financial discipline.
Even more astonishing: this multi-billion-dollar operation didn’t have a CFO.

The AML Breakdown
Perhaps the most glaring regulatory vacuum at FTX was the absence of any enforceable anti-money laundering structure. For a global exchange processing customer funds from more than 130 countries, the failure to implement Know Your Customer (KYC) protocols or monitor suspicious transaction patterns was a direct violation of nearly every global AML expectation.
This gap wasn’t just technical — it was systemic. FTX had no culture of compliance. Regulators now investigating the platform have suggested that the firm allowed high-risk jurisdictions to transact freely, without proper verification. That’s not a mistake — that’s a roadmap for abuse.
And when compliance is missing, criminals don’t hesitate to step in. The very infrastructure FTX built, without audit or AML safeguards, became a channel for unverified funds, poorly documented transfers, and the perfect environment for fraud.

The Audit Illusion
Despite its size and investor base, FTX’s financial statements were never subject to comprehensive, independent audit by a top-tier firm. The company worked with a relatively obscure accounting provider based in the U.S. that lacked the resources or expertise to audit a multinational exchange operating in one of the most dynamic — and risky — markets in the world.
There was no attestation of reserves, no internal controls audit, and no meaningful risk disclosure. Investors, regulators, and even employees were operating in the dark. What little assurance they did have turned out to be dangerously misleading.
This is where audit failure becomes catastrophic: when investors rely on the presence of an auditor without understanding whether the audit meets any legitimate standard of independence or rigor. The illusion of oversight is worse than no oversight at all.

Why This Matters for Every Business — Not Just Crypto
FTX’s collapse wasn’t just about digital assets. It was about the age-old failures we’ve seen in traditional finance: conflicts of interest, weak governance, zero compliance infrastructure, and audits that served as decoration rather than protection.
When companies — especially those handling client funds — downplay AML or cut corners on internal reviews, they don’t just expose themselves to regulatory action. They create the conditions for a complete loss of public and investor trust.
I’ve advised dozens of firms on how to build audit and AML systems that don’t just look good on paper but actually function. What FTX teaches us is that structure must always outpace scale. If growth happens faster than compliance, collapse is a matter of time.
The next time a startup, an investment firm, or even a boardroom questions whether AML and auditing are worth the cost, they should remember FTX — a company once valued at $32 billion, now reduced to a cautionary tale.