Overview
FTX was a leading digital asset and derivatives trading platform founded in May 2019. Headquartered in the Bahamas, it quickly rose to become the 4th-largest global exchange by daily trading volume in 2022 before filing for Chapter 11 bankruptcy in November 2022.
Key Facts
| Category | Details |
|---|---|
| Company Type | Private Company |
| Status | Bankrupt (Chapter 11) |
| Founded | May 2019 |
| Ceased | November 2022 |
| Founders | Sam Bankman-Fried (SBF), Gary Wang |
| Headquarters | Nassau, New Providence Island, Bahamas |
| Products | Cryptocurrency exchange, digital assets |
| 2021 Revenue | $1.02 billion USD |
| 2021 Net Income | $388 million USD |
| Employees | ~300 (2022) |
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The FTX Story
Founding and Rapid Growth
Founded by MIT physics graduate Sam Bankman-Fried (SBF), FTX grew exponentially:
- Achieved 2400% annual growth from 2020-2021
- Peak daily trading volume exceeded $60 billion
- Average daily trading: $14 billion
SBF previously founded Alameda Research (2017), a top cryptocurrency quant firm that became FTX's sister company.
The Collapse (November 2022)
- Liquidity Crisis: FTX's native token FTT lost 70% value amid concerns about Alameda Research's asset composition
- Bank Run: Competitor Binance announced plans to sell FTT holdings, triggering massive customer withdrawals
- Failed Bailout: Binance initially proposed acquisition but withdrew after due diligence revealed mishandled funds
- Bankruptcy Filing: FTX filed Chapter 11 on November 12, 2022
Aftermath
- SBF arrested in Bahamas (December 2022) for financial crimes
- Estimated $8 billion in customer funds missing
- Ongoing bankruptcy proceedings involving 130+ FTX-affiliated companies
Core Business Operations
FTX specialized in:
- Spot trading for 300+ cryptocurrencies
- Derivatives including futures and options
- Innovative products like tokenized stocks and prediction markets
At its peak, FTX processed more daily volume than some traditional stock exchanges.
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FAQs
What caused FTX's collapse?
The immediate trigger was a liquidity crisis stemming from:
- Overleveraged positions between FTX and Alameda Research
- Misuse of customer funds for risky investments
- Loss of trust after Binance's public withdrawal
How much did FTX lose?
Bankruptcy filings show:
- $8 billion customer funds missing
- $3.1 billion owed to top 50 creditors
- $1-2 billion potentially recoverable assets
Where is SBF now?
After extradition to the U.S., SBF:
- Was convicted on 7 fraud charges (November 2023)
- Faces up to 110 years in prison
- Scheduled for sentencing in March 2024
Could FTX have been saved?
Industry analysts suggest:
- Earlier intervention might have preserved value
- Lack of risk management was fatal flaw
- Crypto exchanges now implementing stricter safeguards
Lessons from FTX's Demise
- Transparency Matters: Opaque financial structures enabled misuse of funds
- Risk Management: Even rapid growth requires robust controls
- Regulatory Gaps: Highlighted need for clearer crypto oversight
- Industry Impact: Accelerated calls for proof-of-reserves audits
The FTX saga remains a cautionary tale about unchecked ambition in cryptocurrency markets.
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