FTX: The Billion Dollar Sandcastle
By Ben Chen
February 2025
Not so long ago, FTX was the shining star of the cryptocurrency universe, a beacon of innovation led by its self-proclaimed genius CEO, Sam Bankman-Fried, affectionately known as SBF. With his signature mop of unkempt hair, cargo shorts, and perpetual aura of “I just woke up,” SBF was hailed as the face of the crypto revolution. He wasn’t just the CEO of FTX—he was its mascot, a walking, talking embodiment of what happens when tech bros believe their own hype.
FTX was supposed to be the future of finance, a platform where you could trade digital assets and marvel at how modern technology was transforming money. But behind the slick marketing and celebrity endorsements (thanks, Tom Brady!), FTX wasn’t so much a cutting-edge exchange as it was a high-stakes poker table where the house kept borrowing your chips. SBF promised transparency and security, but in reality, FTX was about as secure as a paper wallet left on a park bench.
The magic trick that made FTX look successful was its cozy relationship with Alameda Research, a trading firm also owned by SBF. Alameda played the role of the cool older sibling, borrowing billions in customer funds from FTX to make risky crypto bets. It was the financial equivalent of robbing Peter to pay Paul, except Peter was every FTX customer, and Paul was Alameda’s growing appetite for speculative gambles.
Of course, no one noticed because SBF had everyone hypnotized. Venture capitalists lined up to pour money into his empire, dazzled by his fast-talking charm and his supposed commitment to philanthropy. After all, SBF wasn’t just a billionaire; he was a good billionaire, the kind who talked about giving it all away while buying naming rights to arenas and mingling with celebrities. Who wouldn’t trust a guy wearing a T-shirt and flip-flops to handle billions in customer deposits?
The house of cards came tumbling down in November 2022, when a leaked balance sheet revealed that FTX had a massive hole in its finances. It turned out that customer funds were being funneled to Alameda like it was Black Friday, and the company had little actual cash to back up its operations. In a matter of days, FTX went from crypto darling to bankruptcy cautionary tale, with customers left holding the (very empty) bag.
As the dust settled, SBF found himself facing a mountain of lawsuits, criminal charges, and the kind of public scrutiny usually reserved for reality TV villains. His defense? A mix of “Oops, my bad” and “I didn’t know what was happening in my own company.” Whether this was genuine ignorance or calculated strategy, it didn’t do much to save face in front of the millions of people who had trusted him with their life savings.
FTX’s collapse sent shockwaves through the cryptocurrency world, wiping out billions in value and leaving a trail of financial devastation in its wake. Regulators around the globe scrambled to tighten crypto rules, while investors realized that maybe, just maybe, putting their money in a largely unregulated industry wasn’t the wisest decision.
Today, FTX stands as a story of how a supposedly revolutionary platform turned into a digital Ponzi scheme, where the only winners were those who got out before the music stopped. And at the center of it all was SBF, the poster child for a new era of financial scandal, proving once again that when it comes to money, trust is the rarest currency of all.