FTX / Alameda Research

Thesis

FTX was the second-largest crypto exchange globally before its November 2022 collapse revealed massive fraud. Sam Bankman-Fried was convicted on seven counts of fraud and conspiracy and sentenced to 25 years in prison. Alameda Research, the affiliated trading firm, had been using FTX customer deposits as collateral. A fundamental breach of fiduciary duty. The FTX collapse destroyed approximately $8B in customer funds and triggered a severe crypto winter. It exposed the dangers of centralized custody, commingled funds, lack of proof of reserves, and regulatory arbitrage through offshore incorporation. The FTX estate is now in bankruptcy proceedings, with creditors receiving partial recoveries. The FTT token is worthless as a utility token since the exchange no longer operates. Key lesson for the 8-signal framework. Smart money entry (Sequoia, SoftBank, Ontario Teachers' Pension) failed spectacularly as a signal because the underlying business was fraudulent. Due diligence by even the most sophisticated investors cannot catch deliberate fraud. Proof of reserves and on-chain transparency are essential guardrails.

Catalysts

• +No active catalysts. Exchange is permanently closed
• +Bankruptcy proceedings distributing partial recoveries to creditors
• +FTX 2.0 relaunch rumors have not materialized

Risks

• -Project is dead. Total loss for FTT holders
• -Massive fraud destroyed $8B in customer funds
• -Legal proceedings against multiple FTX executives
• -Contagion damaged trust in all centralized exchanges

Common questions