FTX, one of the world’s largest cryptocurrency exchanges, once valued at $32B in January 2022, scammed billions from crypto-currency users. The company had built its business on risky trading options that are not legal in the U.S. It was discovered that customer funds went to accounts controlled by Alameda Research — a cryptocurrency trading firm headquartered in Hong Kong and also founded by Bankman-Fried — instead of FTX. After this revelation and the value of cryptocurrency dropping significantly, FTX began to unravel. FTX filed for bankruptcy in November 2022, after a surge of customer withdrawals earlier in the month. The company didn’t have sufficient assets in reserve to meet customer demand. FTX crashed due to mismanagement of funds, lack of liquidity and the large volume of withdrawals.
