#FTXrepayment

WHY DID FTX EXCHANGE COLLAPSE?

FTX, once one of the biggest crypto exchanges, collapsed in November 2022 due to fraud, mismanagement, and financial instability. Here’s a breakdown of what happened:

1. MISUSE OF CUSTOMER FUNDS

FTX secretly funneled customer deposits to its sister company, Alameda Research.

Alameda used these funds for high-risk trades, venture investments, and political donations.

2. LIQUIDITY CRISIS

A leaked balance sheet in November 2022 revealed Alameda’s heavy reliance on FTX’s FTT token as collateral.

Binance’s CEO, CZ, announced plans to sell Binance’s FTT holdings, sparking panic.

A bank run followed, with users withdrawing $6 billion in 72 hours.

3. LACK OF RESERVES & COLLAPSE

FTX couldn’t honor withdrawals because customer funds were already misused.

The company filed for bankruptcy on November 11, 2022.

4. FRAUD & LEGAL CONSEQUENCES

CEO Sam Bankman-Fried (SBF) was arrested and convicted of fraud in 2023.

Investigations revealed billions in missing funds, poor risk management, and false financial reporting.

FINAL THOUGHTS

FTX collapsed due to fraudulent practices, misuse of funds, and lack of financial transparency. This event severely damaged trust in centralized crypto exchanges and led to stricter regulations worldwide.