"I just have faith in my wallet to not mismanage my crypto": Investigating Changes in Users' Security Perceptions Post-FTX Collapse

Non-custodial wallets (NCWs) grant users full control over their keys and crypto assets, whereas custodial wallets (CWs) rely on centralized exchanges. Security breaches at major exchanges are on the rise, exemplified by the 2022 FTX fraud, yet their influence on users' security perceptions and risk mitigation behaviors remains understudied.

We conducted 22 semi-structured interviews and a followup survey with 430 participants to address this gap concerning the FTX incident. We find that learning about FTX reduced trust in CWs and increased perceived security of NCWs. However, most users who were using non-SEC-compliant (equally risky) CWs did not transfer crypto to mitigate potential threats, showing continued trust in current wallets. Those who did often moved all funds from CWs to traditional banks rather than adopting NCWs. Notably, only one-third of survey participants were aware that centralized exchanges hold their private keys, and many still used noncompliant exchanges.

• Security and privacy → Human and societal aspects of security and privacy; • Human-centered computing → Empirical studies in HCI.