11:32in productionCh. 1 · The Trigger/ 11:32 · ceiling 15 min
Scandals
Bankruptcy of FTX
2022
A crypto exchange built on interlocking debt, not deposits — and bankrupt within nine days of its first public red flag.
FTX’s bankruptcy was not a market failure — it was a control failure. Its business model relied on cross-subsidisation between exchange, hedge fund, and token — with no firewalls, no audits, and no accountability. The $8 billion shortfall was not discovered by regulators or auditors. It was revealed when customers tried to withdraw.
A single CoinDesk article about Alameda's FTT holdings triggered the run.
2:11
The Shortfall
An $8 billion shortfall was hidden in plain sight — until withdrawals forced disclosure.
3:40
The Web
Bankruptcy covered FTX, Alameda Research, and over 100 affiliates — not one entity, but a web.
5:35
The Aftermath
Sam Bankman-Fried resigned; John J. Ray III took over — while Bahamian authorities froze a subsidiary’s assets.
6:58
The Illusion of Scale
FTX was the third-largest crypto exchange by volume — proving dominance means nothing without transparency.
8:04
The Timeline
Bankruptcy began in November 2022 — not as a surprise, but as the endpoint of a known pattern.
Worth your time?
Yes. Study the whole thing.
4.5/ 5
What works
exposes affiliate risk
demonstrates speed of contagion in unregulated finance
shows how branding masks balance sheet fragility
What does not
FTX maintained segregated customer accounts
FTX underwent independent financial audit
FTX disclosed its exposure to Alameda Research
Study it if
regulators
crypto investors
exchange platform designers
Skip it if
casual observers
token speculators seeking validation
The written brief1 min read
What the company or idea is
FTX was a Bahamas-based cryptocurrency exchange founded in 2019. It collapsed in November 2022 after an $8 billion shortfall was exposed.
How it actually makes money
FTX made money through trading fees, derivatives contracts, and token sales — but its revenue model was secondary to its balance sheet manipulation.
What works
FTX’s brand, liquidity, and product suite attracted users and volume. Its token FTT created artificial demand — until it didn’t.
What does not
FTX did not separate customer funds from corporate or trading operations. It did not maintain audited, real-time reserves. It did not survive scrutiny of its largest counterparty — Alameda Research.
What to take from it
The collapse proves that scale — over one million users, third-largest by volume — does not imply solvency, governance, or operational integrity.
Is it worth your time
Yes, if you need a textbook case of how opaque capital flows, affiliate entanglement, and regulatory arbitrage can mask insolvency until it is terminal.
