About a month ago, with almost no heads up, crypto’s fifteen largest cryptocurrencies lost $152 billion combined in three days. Yes, you read that right. That is all because of one man, Sam Bankman-Fried (SBF), and his two companies, FTX and Alameda Research. FTX filed for bankruptcy in early November.

FTX is a cryptocurrency exchange where people can trade different cryptocurrencies to make a profit. FTX also has its own token, FTT, which people can trade to make a profit. In the span of three days, this FTT token lost 80% of its value. Why did this happen? What went wrong?

In 2017, SBF created Alameda Research, a trading firm that uses quantitative strategies to decide which cryptocurrencies it wants to trade with. In 2019, he created FTX, the exchange platform. SBF was the majority owner of both companies, raising concerns about conflicts of interest. However, SBF continually stated that the two companies were completely separate.

FTX was able to get billions of dollars in investments when it launched. It became profitable and turned into one of the largest cryptocurrency exchanges in the world. Binance, the largest cryptocurrency exchange, was one of FTX’s most prominent investors. 

Earlier this year, when cryptocurrencies were largely failing, SBF was seen as a hero when he made deals to bail out many large companies. He essentially became the face of crypto. But that all changed when people found out that the majority of Alameda Research’s assets were the FTT token. Alameda Research’s CEO denied these reports, but investors did not believe her, as many sold their shares in FTX.

On November 6, the day that FTT’s downfall began, Binance reported that it sold hundreds of millions of dollars worth of FTT tokens. This led to many more people wanting to sell shares, but many requests were not able to go through that day. 

After a few terrible days for FTX, Binance said that they would buy out the company. However, one day later, Binance said it was stepping out of the acquisition. This was because Binance found out that FTX used money from customers to fund risky bets that Alameda Research went through with.

As more and more people attempted to withdraw money from FTX, they were unable to, because essentially, the value of the FTT tokens was not real. SBF then resigned as CEO, and FTX filed for bankruptcy. To make matters even worse, hackers stole $370 million of FTT tokens.

Crypto is beginning to lose a lot of its trust, as investors are warier of shady actions. “They say to buy low and sell high, but unfortunately with the crypto market, I can never be positive that the current price is ‘low’ anymore,” said Alex Leroy ’25. What will the future hold for crypto?