The abrupt downfall of Futures Exchange (FTX) has sent shockwaves throughout the cryptocurrency industry. In this case report, we delve into the causes and consequences of the crisis at the FTX exchange, examining the precarious relationship with Alameda that sowed the seeds of danger. The extensive lending of money to Alameda, using FTX’s own token as collateral, gave rise to a death spiral, a destructive interplay between FTX’s assets and liabilities. While the repercussions of the event extended to other crypto related entities, the fallout was predominantly contained within the crypto sector. We conclude with a discussion on the future regulatory landscape and its implications for the industry.
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