crypto

FTX

ftx.com | Shut down November 11, 2022

A top crypto exchange that collapsed into bankruptcy in days.

What it did

FTX was a cryptocurrency exchange offering spot and derivatives trading to retail and institutional customers, with heavy sponsorship spending and a celebrity-backed brand.

The facts, as reported

In November 2022, reporting on the balance sheet of affiliated trading firm Alameda Research triggered a customer withdrawal run. FTX halted withdrawals and filed for Chapter 11 bankruptcy on November 11, 2022. Founder Sam Bankman-Fried was later convicted of fraud.

FTX (Wikipedia)
reporting | 11/11/2022
"FTX halted withdrawals and filed for Chapter 11 bankruptcy on November 11, 2022 after a customer run."

Marketur analysis, not fact

Users treated a private company with no meaningful audit as if it were a bank. Brand spend, investor names and stadium logos were mistaken for solvency. Custody risk is the single question and almost nobody asked it while the price was going up.

What to take from it

Do not confuse marketing spend and famous investors with financial soundness.
If a counterparty holds your assets, their solvency is your risk.
Concentration is the risk that ends businesses, not the one that slows them down.