FTX

What someone in two hundred years would need to know to understand it.

Originated 2019 · Founded by Sam Bankman-Fried and Gary Wang, growing out of Alameda Research, his crypto trading firm. Later headquarter… · Also known as FTX.com; FTX.US; FTX Trading Ltd.; The FTX collapse; SBF (for its founder, Sam Bankman-Fried)

What it is

FTX was a company that ran a cryptocurrency exchange: a website and phone app where people swapped ordinary money for digital tokens such as Bitcoin, which exist only as entries in a shared computer record, and traded them. Customers left their money and tokens on deposit with FTX, much as they would with a bank. In November 2022 it came out that billions of dollars of that money had been passed to Alameda Research, a trading firm owned by FTX's founder, and FTX went bankrupt within days.

Where it came from

Sam Bankman-Fried and Gary Wang started FTX in 2019. It grew fast and spent heavily on fame. Its name went on the Miami Heat's basketball arena, sports stars appeared in its adverts, and its 2022 Super Bowl advert showed the comedian Larry David waving away great inventions through history, then crypto. On 2 November 2022 the news site CoinDesk reported that Alameda's assets were mostly FTX's own token. The boss of Binance, a rival exchange, said Binance would sell its holdings. Customers rushed to withdraw, FTX stopped paying out, and it filed for bankruptcy on 11 November. Bankman-Fried was arrested in the Bahamas on 12 December 2022.

How people used it

Before the collapse, people used FTX to buy and trade crypto and kept savings there. During it, they followed the run hour by hour on Twitter, a site where people posted short public messages. They posted screenshots of balances they couldn't withdraw, reposted Bankman-Fried's tweet saying "FTX is fine. Assets are fine.", which he later deleted, and recirculated the celebrity adverts as jokes. They dug up old blog posts by Caroline Ellison, who ran Alameda, and argued about his charity talk. When he was tried in 2023, people posted courtroom sketches and running commentary like it was a sports match.

Why it mattered

For a lot of people it was where their savings were, so the jokes sat next to real losses. Bankman-Fried had been crypto's respectable face: he spoke to the US Congress, gave large sums to political campaigns and said he'd give his fortune away under effective altruism, a movement about doing the most good with money. The collapse took all that down at once and became the main exhibit in the row about whether crypto was mostly fraud. He was convicted of fraud in November 2023 and sentenced to 25 years in prison in March 2024.

The jokes around it

• "FTX is fine. Assets are fine.": his tweet, quoted back at every reassurance from a crypto company afterwards.
• "Don't be like Larry": the Super Bowl advert's slogan, flipped once Larry David's doubting character turned out to be right.
• "Have fun staying poor": the crypto fans' taunt at sceptics, thrown back at them.
• John J. Ray III, who took over FTX after cleaning up Enron, saying he'd never seen "such a complete failure of corporate controls".
• The FTX Arena name jokes, until the Miami Heat's arena was renamed.

What noah thinks it shows about us

People trusted FTX because it looked like the establishment: an arena name, sports stars in the adverts, a founder on magazine covers in shorts. Within a week the same feeds that shared the adverts were sharing them as jokes, and the collapse was watched live by the people losing money in it.

What noah is not sure of

The size of the missing customer money is usually reported at around $8 billion, but figures vary. The bankruptcy estate later said most customers would be repaid, valued at November 2022 prices; the details weren't final when these notes were written. The exact date the arena was renamed is not checked here.

Noah wrote these when he decided to keep this. They’re stored in the Ark as context.txt and count towards its size limit.