Just months ago, FTX appeared to be a significant success story in cryptocurrency.
FTX is short for "Future's Exchange." It was a project that promised to be a revolutionary new digital asset exchange platform—and it had the backing of a group of well-known investors and even celebrity endorsements. But something happened along the way.
The FTX project has gone from being one of the market's most promising cryptocurrency projects to being a cautionary tale about how things can go wrong when you don't do your due diligence.
Max Chamberlin, CEO of InfinitySwap, and Bob Bodily, CEO of Toniq Labs, hopped on a Twitter Space to discuss what went wrong with FTX, people's reactions on social media, and the event's implications on the crypto world.
How Did The Scandal Start?
The market believed the FTX implosion was triggered by a bank run on the exchange. With the rise of cryptocurrencies, much of the world is still getting to know how these digital tokens work—for people who own them, for those who trade them, and for regulators. As more facts have emerged, however—and as time has passed—the story around the company has gotten much more complicated.
Here is a rough timeline of events:
On November 6, 2022, Changpeng Zhao, the founder of Binance, announced that he would be selling off all remaining FTX tokens "due to recent revelations." The price of FTT plummeted as other investors also started to withdraw. This was caused by a report released by CoinDesk regarding the balance sheet with FTT, the currency used by FTX.
On November 9, 2022, despite Binance agreeing to acquire FTX, the corporation quickly withdrew from the agreement.
On November 11, 2022, FTX Corporation filed for bankruptcy. Founder Sam Bankman-Fried also resigned as CEO of the company. On the same day, news outlets reported that FTX has transferred around $10B to Almaeda, its sister company. It sparked public concern.
2 days later, on November 13, 2022, news outlets started reporting that the money sent out of FTX in its has seemingly vanished.
In this AMA, Max Chamberlin and Bob Bodily discussed a tweet from user @powerfultakes. The tweet reads: "If SBF's core aim was either to rule or ruin crypto (heads I win, tails you lose), he probably succeeded. FTX rug will shatter public confidence for years, this isn't some shady 3rd tier exchange."
FTX was ranked as one of the largest crypto exchanges by volume and valued at $32 billion in January. Its name could be found attached to an NBA stadium or advertised with celebrities like Tom Brady and Larry David—or both!
After filing for bankruptcy last week, the once-promising cryptocurrency exchange has lost value and credibility. Experts say the failure of FTX's digital currency could affect other companies in the cryptocurrency industry.
If What Was Coming Was So Obvious, Why Didn't Anyone Notice?
A tweet by user @trading_vapor talked about how Sam Bankman-Fried, CEO of FTX, health was deteriorating and how you "don't turn into a goblin" when everything is okay with your life.
Max starts talking about the transcripts from Sequoia, where they had a blog post that sounded a lot like a parody. This blog post alluded to the collapse of FTX even before Sam's physical appearance worsened. Generally, people didn't see the collapse coming because of the fear of missing out, or greed itself - these two factors can cloud someone's judgment effectively.
Was The FTX Collapse Caused By A Hack Or A Rug?
The FTX collapse is one of the biggest stories in cryptocurrency. It's caused a lot of people to lose a lot of money—and it's also caused a lot of speculation about what actually happened.
On one hand, there are those who think it was a hack—that someone hacked their systems and stole all their funds out of thin air. On the other hand, there are those who think it was a rug—that someone with inside access took all the money without anyone noticing.
Of course, we'll never know for sure what actually happened. But if we had to guess, we'd say it was more likely that this wasn't an outside hack at all: that it was done by someone with inside access, like an ex-employee or someone who didn't like Sam Bankman-Fried at all.
Bob says he feels like this is more like a hack than a rug—but whether it was either one or neither one doesn't matter! What does matter is that people's funds were still lost because of this event, which means that SBF himself, as the CEO, should be held accountable for moving client funds without any oversight.
How Damaging Is This To The Industry Image, And What Can We Learn From It?
The fall of FTX has caused shockwaves throughout the crypto industry. According to Bob, high-profile events like this can be used as ammunition by people to go after crypto. Instead, we should look at it from a different perspective to get the correct takeaway from FTX's downfall. This debacle is a lesson for everyone in the cryptocurrency world: decentralization is the only way to ensure that transactions are fair and safe.
A centralized network means one person or group has control over a cryptocurrency, which means they can manipulate it to their own ends. If a centralized network has any flaws, there's nothing to stop an individual from exploiting those flaws to their advantage.
Updates On Toniq Labs And VOLT
Toniq Labs wrote a pretty expansive thread on Bob's vision for the Volt ecosystem. We're excited to see what this means for the future of crypto, and what it could mean for our wallets. Imagine you had your own personal computer in the cloud, and with apps on it that would fit into your Volt ecosystem. Imagine having a different environment—your own space powered by crypto assets.
Volt is an intelligent wallet solution built on the Internet computer. Volt lets you have your own canisters. And because it's all built on the Internet computer—which means that there's going to be plenty of room for growth—there will be new features added regularly over time!
Updates on InfinitySwap
On the wallet side, InfinitySwap is also planning to integrate Bitcoin. They're also eagerly anticipating the release of the new BTC test net, which we expect will come out soon so that we can integrate it into our wallet and use Bitcoin natively as well as a swap for SNS tokens, according to CEO Max Chamberlin.
Stay Tuned For More Updates On The World Of Crypto
The recent FTX collapse has been a dark time for crypto enthusiasts. Shortly after the news broke, we saw many people posting their reactions online, with some saying they would sell all of their cryptocurrency and others saying they would keep holding on.
Amid this chaos, we were so grateful to see that there were still people who remained optimistic about cryptocurrency's future. We're lucky enough to have a fantastic community of crypto experts and crypto enthusiasts on our platform who are always ready to talk about what's going on in the world of blockchain.
We encourage you to comment below to join our community’s discussion. We'll be back next time with another AMA, so stay tuned!