FTX / Crypto Collapse 2022
The 2022 crypto winter peaked with FTX’s November failure: commingled customer assets, a hidden related-party book (Alameda), and a run that was old-fashioned bank fraud in a new venue.
Definition
Terra/Luna (May) and Three Arrows (June) were the credit events; FTX was the run-plus-fraud. Customer deposits funded affiliated risk. When a balance-sheet leak met withdrawals, the exchange was insolvent in days. On-chain transparency did not help if the books were lies.
Why it matters
It restated: an unregulated custodian is a bank without a supervisor. ‘Code is law’ does not audit a spreadsheet.
Case
CZ’s tweet, a weekend of withdrawals, and bankruptcy. Contagion hit Genesis, BlockFi, and others. Bitcoin was already down from the 2021 high; FTX was the trust event.
How to read it
Segregation of customer assets, related-party exposure, and who can gate withdrawals. If those are unclear, you are an unsecured creditor.