FTX Crashes: Everything You Need to Know

PUBLISHED Nov 21, 2022, 10:27:16 AM        SHARE

imgTobi Opeyemi Amure

The fall of FTX has been the talk of the town, especially for those who have been in the cryptocurrency field. However, for amateurs and those who are just starting out, there may be many things you need to understand. First off, we hear of FTX losing a whooping sum of $2 trillion in May. This alone had shook the pillars of several companies and led many others to the dust. FTX itself was on the edge and about to tip off as well when their rival, Binance, came to the rescue. At least, Binance made it seem so. Suddenly, to the surprise of the entire crypto-universe, Binance announced that they were pulling out of the deal. What really transpired between the companies? What are the minute details you need to be aware of for a way forward with all of this? Carry on with this exciting article for a comprehensive discussion on this crypto crisis of 2022.

About FTX

When it comes to Bitcoin derivatives and leveraged products, one needs to look no further than FTX Exchange. It is the industry standard for centralized exchange. This company is the brilliant initiative of Sam Bankman-Fried, an MIT alumnus. Sam, a former trader in international exchange-traded funds at Jane Street Capital, founded FTX in 2018. The company provides a variety of trading products, such as derivatives, volatility products, and leveraged tokens. In addition, it offers BTC/USDT, ETH/USDT, XRP/USDT, and FTT/USDT. It also offers spot markets in more than 300 cryptocurrency trading pairings. There are FTX management teams in the Bahamas and FTX US teams. Their activities are similar, although their financing structures are different. FTX's diverse offerings and user-friendly desktop and mobile trading programs appeal to crypto investors of all experience levels. From simple market orders to advanced trailing stop orders, its platform has everything. There are nine fiat core currencies that the platform supports, which are:

  • U.S. dollar

  • Euro

  • British pound

  • Australian dollar

  • Canadian dollar

  • Swiss franc

  • Brazilian real

  • Ghanaian cedi

  • Argentine peso There is also the Turkish lira and Japanese yen, but they have limited functionality. The Hong Kong dollar, Singapore dollar, and South African rand are set to join them shortly.

    About Binance

    Binance is a cryptocurrency exchange that operates online. Changpeng Zhao launched the exchange platform in 2017. The platform is geared primarily toward dealing in alternative cryptocurrencies. More than 600 different coins can be traded on the platform, including Bitcoin, Ethereum, Litecoin, Dogecoin, and Binance Coin (BNB). It remains one of the most popular exchanges for digital currencies due to its low transaction fees, especially for crypto-to-crypto trading. Those who choose to use the native BNB cryptocurrency tokens to make purchases are eligible for discounts. They also get to enjoy the platform's high liquidity. Binance's high processing throughput comes from its safe and secure multi-tiered and multi-cluster design. This allows it to handle approximately 1.4 million orders per second.

    Timeline of the Crash of FTX

    Here is what went on between Sam Bankman-Fried and Changpeng Zhao before the fall of FTX:

    The Growing Concerns of FTT’s Fall

  • On November 6, Changpeng Zhao made a tweet about selling out Binance’s stockpile of FTT. According to him, this was due to “recent findings that have come to light.” This was shortly after November 2 CoinDesk piece on FTX and Alameda’s muddled money.

  • He compared the current state of FTX with the TerraUSD and LUNA crashes of this year. Furthermore, he noted that FTX’s current state is having a similar effect on the cryptocurrency industry and has lost investors billions of dollars. However, such changes in the market are rarely made public.

  • FTT's value plummeted the following day due to growing concerns that FTX had the resources to support itself and remain operational. Bitcoin's value hit a two-year low, while that of other currencies such as Ethereum also fell. On Thursday, Bankman-Fried tweeted that $5 billion had been withdrawn from the platform on November 6.

Agreement and Dispute Between Zhao and Bankman-Fried

  • Afterwards, Binance's acquisition of FTX's operations outside of the United States was arranged by Zhao and Bankman-Fried. On November 8th, CEOs of the exchanges signed a nonbinding statement of intent. They agreed to bail out the failing exchange so that a wider market meltdown wouldn't occur.

  • However, Binance suddenly backed out. Within 24 hours, Zhao announced on Twitter that Binance will not be acquiring FTX after completing its "corporate due diligence." Reports of "mishandled client cash" and "supposed U.S. government probes," as Zhao put it in a tweet, influenced his decision. A mysterious tweet from Bankman-Fried that appeared to relate to Zhao and his role in FTX's decline read: "Well played; you won."

  • All non-fiat customer withdrawals were suspended by FTX on November 8th. Bankman-Fried took to Twitter to apologize for FTX's liquidity problems and explain the exchange's lack of communication.

  • On November 10, FTX.US sent a warning to its customers on the login page. It read that trading "may be suspended on FTX US in the next few days," but that withdrawals would still be possible.

  • On Friday, November 11th, FTX made public its decision to voluntarily enter Chapter 11 bankruptcy protection. This protection was to guarantee itself, FTX.US, and Alameda. Instead of having their assets liquidated in Chapter 7 bankruptcy, businesses can reorganize their debts under Chapter 11 and keep running.

  • However, despite prior promises that FTX.US was unaffected by FTX's liquidity issues, FTX.US briefly blocked withdrawals on Friday. This was shortly after the bankruptcy declaration. Eventually, withdrawals were made available again.

The Eventual Fall of FTX

  • An alleged breach occurred on Friday night, draining FTX and FTX.US wallets. According to CoinDesk, about $600 million was stolen from the accounts. Telegram, an instant messaging service, was used as a support channel for FTX following the attack.

  • The channel rendered the following message: "FTX has been hacked. FTX applications are malware. Delete them. Chat is open.” It further read: - “Don't go on FTX site as it could download Trojans."

  • According to one Twitter user, cybercriminals have also been targeting FTX.US bank accounts. Around this time, Plaid, a firm that links consumer bank accounts with financial apps, cut off FTX's access to their goods. The company took this action despite the fact that they had found no evidence that their tools had been used illegally.

  • It was claimed that Plaid had done so after hearing "concerning public reports.”

  • General Counsel Ryne Miller of FTX made a tweet the same evening of the heavy strike. He mentioned that the business will hasten the transfer of remaining assets to cold storage (offline) due to the "unauthorized transactions.”

  • The Financial Times revealed FTX's balance statement on the 10th of November, 2022. It detailed $9 billion in liabilities and just $900 million in liquid assets. There was a jumble of entries, including one for a "secret, badly internally named 'fiat@' account," with a negative $8 billion balance.

    The Aftermath of the FTX Crisis

  • Criminal proceedings have been opened against FTX in its home country of the Bahamas. According to CoinDesk, Bankman-Fried shared the home with nine business associates and on-and-off love partners. Former FTX workers claimed that only this select group had access to the true details of the firm's complex financial situation.

  • Finally, the hacker who stole over $600 million from FTX began transferring the assets on the blockchain from various addresses. At first, he sent some to the stablecoin DAI and subsequently to Ethereum (ETH). According to data compiled by CoinDesk, the user is currently the 35th largest holder of ETH globally.

    The Effect of the Crisis on FTX US Customers

    According to the FTX announcement, FTX.US is part of the company's Chapter 11 bankruptcy case. In a statement, Ray, the company's new CEO, stated their goal is to "maximize recovery for stakeholders." However, there isn’t much to show for this statement yet.

Some customers have stated that their wallets had been emptied as of Friday night. This was shortly after the purported $600 million breach. Consumer withdrawals were momentarily halted earlier that day on FTX.US but have since been reinstated. The FTX user login page is down at the moment.

The Effect of the Crisis on the US Crypto Market

The problems at FTX have had a significant impact on the American cryptocurrency market. On both November 9 and 14, Bitcoin's price fell below $15,000. In the past week, $3.2 billion worth of bitcoin has been removed from exchanges. On November 9th, the price of Ethereum fell below $1,100. On November 9th, after CoinDesk reported that Alameda had a significant quantity of Solana, the price dropped below $13. In the previous week, Solana applications lost almost $700 million in total assets. Also, on November 13, the stock price dropped below $13 once again. Furthermore, on November 10, Tether saw a temporary 3% depeg from the US dollar.


It's important to remember that cryptocurrency is a high-risk asset class. A small percentage of your portfolio can be allocated to high-risk investments. By purchasing multiple different cryptocurrencies, you can spread out your exposure and lower your overall risk. As of now, the future of FTX is totally uncertain.

Storing your cryptocurrencies in online wallets, exchanges and software wallets exposes you to risks of being hacked. Consider storing them in a hardware wallet today

Sound investments
don't happen alone

Find your crew, build teams, compete in VS MODE, and identify investment trends in our evergrowing investment ecosystem. You aren't on an island anymore, and our community is here to help you make informed decisions in a complex world.

More Reads
November 2022 Stock Considerations

With a new trading month already in full swing it is time, once again, to highlight some of my potential stock purchases.

How is your Retirement Plan?

Retirement Accounts, Retirement Planning, and what your purpose means in retirement

Watching & Waiting

Stock Market Commentary

How To Save Money Fast – 26 Easy Tips

We all know it’s important to save money. But how do you do that when inflation is up, mortgage rates have increased, and rents are rising? Oh, and don’t forget – extra spending is coming with the holidays around the corner. Yet even in tough times, there are strategies to help build savings fast.

Here Are The Requirements For A Hard Money Loan

Hard money loans are one of the more popular options for buying fixer-upper homes to renovate and resell for a profit. While there are alternatives available – such as using a traditional or renovation mortgage – hard money loans usually fund far faster and are less restrictive. If you’re considering a hard money loan for an investment property purchase, here’s a look at what hard money loans are and the typical requirements for a hard money loan.

Unstable Value Funds (VI)

Well, the last installment in this series was 2009. I ran a Guaranteed Investment Contract [GIC] desk at Provident Mutual from 1992-1997. I also managed our internal stable value funds for our pension line of business. This was during a period where increasingly Stable Value Funds were being replaced by bonds and bond funds being wrapped by a type of derivative that would allow for “benefit responsive payments,” called a “wrap contract.”

What is a dividend trap, and how do you avoid it?

With recent declines in stock prices, dividend traps are becoming more prevalent. In this blog post I'll describe what is a dividend trap, it's potential downfalls, and how to avoid these traps. Before we begin, you need to understand dividend yield, and the dividend payout ratio.

Margin call What is it ?~No.1 Beginners Guide

For starters this happens from time to time. Today we address the no.1 cause of sleepless nights for most newbie traders risking their hard earned money in the markets especially when it comes to a margin call what is it and how can you avoid it?

Why I’m Fascinated With Dividend Investing

I’ve been fascinated with dividend investing for many years. It goes back long before I started my journey to financial independence and early retirement. It seems so simple. You buy a company stock that is stable and has dividend history on their side. A stock that figures for a potential future of continued business with dividend and stock growth.

6 Investing Lessons from Our Honeymoon’s Terrible Start

We had a terrible start to our honeymoon. Bad luck and human incompetence torpedoed our first travel day. Naturally, I took it as an investing lesson. Our itinerary was Rochester –> Boston –> Tokyo –> Hanoi. Then after a few days in Hanoi, onward to Chiang Mai, Bangkok, and other parts of Thailand. But things went poorly from the start.


​Many teens think they know almost everything – that is until they have to experience adulthood for themselves. Parents of adult children will likely tell you that when their children were teens they, as parents, “knew nothing,” but when the magic of adulthood came around, everything changed. Your teens may even think they know how to budget. As a parent, however, you know that it’s not always easy to make and stick to a budget. So how do you teach teens about budgeting? At Wealthy Habits, our goal is to make the conversation easier and a lot more fun for both parents and teens. Here are three tips we share in our online parent webinar, How to Teach Your Kids About Budgeting.

Budgeting on a Single Income

According to a 2017 report in Market Watch, half of American households are living paycheck to paycheck, and about 49% of Americans worry about their financial well being. Living on a single income only amplifies the stress and worry about finances. Having a plan, maintaining fidelity to it, and re-evaluating that plan can all help minimize the stress and allow you to have control over your expenses and your future.

US Economic Growth Expected To Continue In Q4

The recovery in US economic activity in the third quarter appears set to continue in Q4, based on the median for a set of estimates compiled by CapitalSpectator.com. Although the numbers point to a slowdown in growth, the current Q4 nowcast highlights the possibility that output will post back-to-back quarterly increases for the first time this year

Higher Japanese CPI Won't Change the BOJ's Stance

The capital markets are heading into the weekend mostly quietly in a consolidative fashion.

Skyworks Solutions (SWKS) Stock: An Undervalued Chipmaker

Over the past five weeks, the market has been up 14.7%. Also, after the CPI report was issued last Thursday morning, the market and almost all the stocks had a tremendous run-up. In two days, the market is up nearly 7%.

2 Recession-Proof Utility Stocks With Safe Dividends

The Fed has raised the Fed Funds rate six times this year to combat inflation and the last four times at a 0.75% clip. The current 4% rate is the highest in well over a decade. But the Central Bank has indicated that it will take more pain to get that inflation genie back in the bottle.

Markets are Less on Edge as the Darkest Scenarios seem Less Likely

Overview: The situation in central Europe is still intense but it appears top US, European and Polish officials are more reluctant than some market participants to attribute the darkest of intentions and paint extreme narratives.

WestRock (WRK) A Dividend Stock Comeback Story

Yes, this is a random WestRock (WRK) dividend stock, come back story. Why is it a comeback? WestRock decimated their dividend during the height of the pandemic from COVID-19. One of the world’s biggest, packaging companies reduced their dividend to $0.20 per share, per quarter from the high of $0.465.

Investing Starts with an Investment in Yourself

Invest in yourself - it’s the best thing you can do.

Market Musing 11-14-2022: Is a Market Bottom In?

High Volatility: VIX > 23. The US Markets bounced hard on Thursday’s CPI Data. Will Chair Powell pivot on rate hikes before the end of year?

Resources for Publishers
Resources for New Investors

Boosted with BossCoin