A new report has emerged talking about what it was that really led to the destruction and collapse of the FTX digital currency exchange.
Why Did FTX Really Fall?
Everyone would like to think it was heavy corruption or something similar, but per the words of the report, it was merely “hubris and greed.” Hubris is described as “arrogance before the gods” (according to games like Far Cry 5). Mere mortals like us should take that like everyone at FTX had tremendous egos. They all thought they were too smart and too capable and thus didn’t take necessary precautions.
In terms of greed, it’s clear that many people involved with the company sought to get their hands on money they didn’t necessarily need. Money that belonged to other people. This is among the many charges that the former head executive of FTX – Sam Bankman-Fried – is now facing. It is said that SBF utilized customer funds to purchase luxury real estate in the Bahamas, where the company was stationed. Naughty, naughty, naughty…
In addition, the debtors’ report also suggests that an incredible lack of competence underlined the many mishaps that occurred behind the FTX walls. For example, the company failed to create key executive roles to ensure specific duties were tackled in due time. Thus, you had an environment where everyone was clearly multi-tasking… Something they weren’t equipped to do. There was also no cybersecurity department to keep customer funds safe should mishaps have occurred (which they obviously did).
Lastly, the company is believed to have lied to third parties about its funds and business dealings, and there were many jokes amongst employees about how quick the company was to lose track of millions of dollars at a time. There was also no controlled framework or oversight of business dealings. In the end, this helped the firm to “collapse as quickly as it had grown,” the report comments.
The fall of FTX is likely to go down as one of the most embarrassing occurrences within the digital currency space. Founded in 2019 (merely four years ago), the company quickly rose through the ranks to become the third largest crypto exchange in the world by the summer of 2021. Everyone thought the company was on top of the world and incapable of collapsing, but they were wrong…
A History of Bad Behavior
In November of 2022, Sam Bankman-Fried complained online that his company needed cash fast to continue operating. He approached his competitor Binance about being bought out, but the latter firm took one look at FTX’s issues and quickly said “no.” FTX then had no choice but to file bankruptcy.
It wasn’t long before this led to the arrest of Sam Bankman-Fried, who is now awaiting trial at his parents’ home in Northern California.
