What was FTX?
A digital-currency exchange, FTX allowed people and institutions to invest in cryptocurrencies. Founded by Sam Bankman-Fried (SBF) in 2019, the platform grew quickly, becoming the world's third-largest crypto exchange by volume, worth about $32 billion. Even as the crypto boom seemed to be ending, during 2022, FTX appeared to be a solid, well-managed platform.
The revelation
In November 2022, the crypto news website CoinDesk reported that Alameda Research, a trading firm also run by SBF, held a large amount of a digital currency called FTT. It had a certain market value, but if the price were to fall, Alameda could go bankrupt. Worried investors began to sell their FTT tokens, which caused the price to fall sharply, leading to FTX's insolvency.
What it means for crypto
Not only have FTX investors and creditors lost a lot of money, the collapse of such a big exchange undermines faith in crypto in general. If FTX can fail, it can happen to others, too. There is significant market uncertainty at the moment.