The collapse of FTX, a major global cryptocurrency exchange, has sent ripples through the financial world. Is this crypto’s Lehman Brothers moment?

In the span of 10 days in November, a major global cryptocurrency exchange collapsed.

Billions of dollars vanished from users’ wallets overnight. 

And last Friday, FTX – once seen as a pillar of the crypto world, and valued at US$32 billion – filed for bankruptcy.

Criminal probes are being launched and people are very, very angry. In a market never far from ignominy, this was a huge flop. What happened?

The Detail talks to Darian Woods, host of NPR’s The Indicator podcast, about FTX’s demise.

“The big lesson is: know what you’re investing in,” he says.

We take a closer look at the cast of characters involved.

Sam Bankman-Fried

Bankman-Fried, known as SBF, co-founded FTX in 2019 at the age of 27. He served as the CEO until resigning last week.

Woods says SBF has long been perceived as “the good guy” in the world of crypto, having advocated for stronger regulations in the rapidly-growing and poorly-policed cryptocurrency industry.

“He’s kind of been this antidote to the ‘crypto bro’ – at least, that’s the image that he’s been projecting,” says Woods.

Prior to the implosion of FTX, SBF was worth an estimated $16 billion.


FTX is a cryptocurrency exchange. 

“It matches crypto buyers with crypto sellers,” says Woods. 

“This is meant to be a pretty straightforward business, not huge risk; it’s meant to clip the ticket on the way and help people buy Bitcoin, or Ethereum,” he explains.

Exchanges primarily make money by taking commissions and transaction fees from trades conducted on their platform. However, FTX also released its own token (virtual currency), FTT.

“[Issuing a token] is analogous to stocks – a company wants to raise money, they will issue a share of future profits … It’s about the confidence in the company.”

But unlike stocks, tokens are not regulated.

At its peak, FTX was the fourth-largest cryptocurrency exchange in the world. 

Alameda Research

SBF founded Alameda Research back in 2017.

Woods says Alameda is a more “speculative” company in the cryptocurrency market.

“It borrows, it makes bets, it finds arbitrage opportunities – inconsistencies in the market where it can do what a trader might do, and see those inconsistencies and make a bit of cash.”

While there is nothing illegal about what Alameda does, this is where the trouble started.

Woods tells The Detail how SBF’s two separate companies, FTX and Alameda, blurred lines by shared a co-working space in the Bahamas, and that he and the CEO of Alameda were once (and may still be) living together as lovers.

Changpeng Zhao

Zhao, known as CZ, is the CEO of Binance, the largest cryptocurrency exchange in the world and a competitor to FTX.

CZ was once a mentor to SBF, but the two have since had public disagreements, especially on the topic of regulating the cryptocurrency market.

“They’ve been kind of frenemies in the cryptocurrency world,” says Woods.

Binance had made an offer to rescue FTX, but backed out of the plan.

For more about the events leading up to FTX’s tremendous fall from grace, listen to the full episode.

Find out how to listen and subscribe to The Detail here.  

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