FTX: The Trust Collapse
11 November 2022
One of crypto’s most visible exchanges entered bankruptcy. Customer balances were not what they seemed.
Origins
FTX offered centralized cryptocurrency trading while the affiliated firm Alameda Research operated in trading markets. Customers relied on the exchange’s controls and representations when depositing assets.
The moment
FTX and associated entities filed for bankruptcy on 11 November 2022. The event followed a rapid crisis of confidence. Subsequent prosecutors’ allegations described the misuse of customer assets and misleading statements about the businesses.
The aftermath
Bankruptcy and criminal proceedings exposed the difference between a displayed balance and an enforceable claim on assets. The comparison with Mt. Gox concerns custody and user dependence on intermediaries. It does not suggest that either collapse was a failure of Bitcoin’s ledger.