FTX Scandal Series — Part 2: Where Did the Money Go?
How did one of crypto’s biggest exchanges collapse so quickly?
FTX, founded by Sam Bankman-Fried, was once considered a major name in crypto. But behind its public image, a serious financial scandal was unfolding.
🔎 What happened?
• FTX and Alameda Research: Alameda was a trading firm founded by Bankman-Fried. Investigators uncovered deep financial connections between Alameda and FTX.
• Customer Funds: Prosecutors proved that billions of dollars in FTX customer funds were misused, including to support Alameda, repay debts, and fund other expenses.
• The Collapse: In November 2022, a liquidity crisis triggered a wave of customer withdrawals. FTX could not meet the demand, filed for bankruptcy, and exposed a massive hole in its finances.
• The Legal Consequences: In November 2023, a jury found Bankman-Fried guilty on seven fraud and conspiracy counts.
The key lesson: An exchange’s reputation, celebrity endorsements, or impressive valuation do not guarantee the safety of your funds.
Part 3: The trial, the sentence, and the lessons every crypto investor should learn.
What do you think was the biggest warning sign?
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