☘️ What happened?
Sam Bankman-Fried (SBF), once the mogul behind FTX – the world's second-largest cryptocurrency exchange, held assets worth tens of billions of dollars. At the end of 2022, FTX went bankrupt. The reason? SBF quietly transferred $10 billion of customer funds to his own company, Alameda Research. At least $1–2 billion went missing.
☘️ Why did it collapse?
• Using customer money as their own: FTX did not separate customer assets from those of the subsidiary Alameda.
• Domino effect: The rapid collapse of Terra/Luna, cash tightening, plummeting Bitcoin prices, and large funds defaulting, leading to FTX's inability to survive.
☘️ Quick developments
1. Investors rushed to withdraw money upon discovering suspicious signs.
2. November 2022: FTX goes bankrupt.
3. SBF indicted on multiple charges, facing up to 110 years in prison.
4. March 2024: SBF officially sentenced to 25 years in prison, $11 billion in assets confiscated.
☘️ A painful lesson
• A series of fundamental mistakes led to the collapse of FTX. First was the failure to clearly distinguish between customer assets and internal assets – leading to reckless use of funds and increased systemic risk. Next, the image of SBF was built up too glamorously, with massive media coverage, but in reality, it concealed a loose, outdated financial system.
• FTX relied too much on borrowed capital and financial leverage for rapid growth, but when the market declined, this model collapsed like a domino effect. Meanwhile, the legal environment surrounding crypto was too lax, almost without strict control mechanisms. Ultimately, FTX's internal governance and oversight were completely lacking – no one was really monitoring risks or providing early warnings, leading to everything falling apart in just a few days.
☘️ Greater consequences than FTX
• Trust has significantly diminished: The crypto ecosystem is shaken, with market capitalization evaporating by tens of billions of dollars.
• Tighter supervision: SEC, DOJ, CFTC… begin to tighten regulations on crypto.
🍀 Quick conclusion
• $10 billion evaporated.
• FTX collapsed, SBF sentenced to 25 years.
• This is a wake-up call for investors and regulators – cryptocurrency is not a place to 'jump into anything that looks bright.'
❗️ Remember:
1. Customer assets must be separated and managed transparently.
2. PR cannot replace financial reports.
3. Stay away from high-leverage borrowing models.
4. Legal compliance and control are vital.
The collapse of FTX was not just a trillion-dollar scam – it was also a painful lesson about trust, transparency, and accountability in the cryptocurrency world.
#CryptoNewss #CryptoSecurity #RiskManagement
