Curriculum·S209 The Centralized Exchange in Depth·about 30 min
Counterparty risk, seriously
By the end of this lesson you can
- →Separate the four counterparty exposures and identify which are negotiable
- →Assess a venue on what is observable rather than on what is asserted
- →Compute an exposure limit from a stated tolerance and apply it per venue
- →Explain why the observation problem is structural and what follows from that
Sophomore · enrolled learners
This lesson opens with Ten years, and the decision to compensate.
- What happened
- Mt. Gox collapsed in February 2014 with about 850,000 BTC missing, around $473M at the time, of which roughly 200,000 were later recovered. Japanese proceedings ran through bankruptcy and then civil rehabilitation, and the trustee did not begin distributing to creditors until July 2024, more than ten years later, with the final deadline extended repeatedly. Set against that, on 10 October 2025 Binance announced compensation for users whose collateral had repriced during a 40-minute window, including liquidation fees, within days. Both outcomes were determined by parties other than the affected customers, under processes those customers had no standing in, and neither was a term any customer had agreed to in advance.
- The decision point
- The two cases differ enormously in speed and in outcome, and they are the same exposure. One venue's process took a decade under a foreign insolvency regime; another's took days and was discretionary. What a customer holds in both cases is a claim whose resolution is decided elsewhere, and the range of outcomes from days-and-generous to a-decade-and-partial is the actual width of the exposure.
- Recorded loss
- $473,000,000
What you will be able to answer
- →Name the four counterparty exposures.
- →Why is the observation problem structural?
- →What is the only control you fully hold?
- →What is the width of the exposure?
Orientation and Year One are open: anyone can read them without an account. From Year Two onward the lessons are for enrolled learners, because progress through the later years only means anything if it is tracked against a record.
It is free. We do not sell the list and there is nothing to buy at the end of it.
Sources and review
- https://www.nbcnews.com/business/markets/mt-gox-begins-repaying-bitcoin-creditors-decade-after-collapse-rcna160489
- https://www.coindesk.com/markets/2025/10/12/binance-to-compensate-users-affected-by-crash-in-wbeth-bnsol-and-ethena-s-usde
- https://www.arnoldporter.com/en/perspectives/advisories/2023/01/read-before-you-click-accept
- https://www.cftc.gov/media/8226/enfsinghcomplaint022823/download
Confidence high·Volatility high·Reviewed 2026-08-06·Owner unassigned
Contested
F107-04 introduces counterparty risk at Freshman level and owns the proof-of-reserves treatment. This lesson adds the discretion and duration analysis and the per-venue limit method. Keep the split.
The two cases compared here occurred under different legal regimes, at different scales, and with different causes. They are used to establish the width of the outcome range, not to suggest either is representative.