Introduction
The FTX collapse stands as one of the most dramatic events in cryptocurrency history. This article reconstructs the timeline with verified public records while maintaining narrative flow. We've preserved key financial analyses and social media exchanges that shaped this crisis.
The Unfolding Crisis
November 2: The First Domino Falls
In CoinDesk's Park Avenue headquarters, editors greenlighted an explosive report revealing Alameda Research's balance sheet anomalies. Their findings showed:
- 70% of assets consisted of FTT (FTX's native token)
- Minimal traditional fiat reserves
- Circular financing between SBF's companies
This revealed extreme liquidity risk that traditional financial institutions would never tolerate.
November 6: The Battle Goes Public
CZ's Binance liquidation announcement triggered a chain reaction:
- Alameda CEO Caroline Ellison offered $22/FTT buybacks
- Whale Alert tracked $600M FTT transfers to Binance
- FTT price swung violently between $15-$24
👉 How major exchanges handle liquidity crises
November 7-8: The Bank Run Accelerates
Key developments:
| Date | Event | Impact |
|---|---|---|
| Nov 7 | SBF's "Make Love Not War" tweet | Failed to calm markets |
| Nov 8 | $6B withdrawn from FTX | Systems began failing |
| Nov 8 4PM | Withdrawal delays confirmed | Panic intensified |
FAQs:
Q: Why couldn't FTX stop the run?
A: Like traditional banks, exchanges can't handle mass simultaneous withdrawals. Their fractional reserve system collapsed.
Q: How did Alameda contribute?
A: Their overleveraged positions using FTT as collateral created a house of cards.
November 9: The Bid That Wasn't
The supposed Binance acquisition fell apart after due diligence revealed:
- $8B liquidity gap
- Comingled customer funds
- Accounting irregularities
CZ tweeted: "Sometimes we have to let go" with a crying emoji.
Aftermath and Lessons
Regulatory Impact
The collapse spurred global demands for:
- Proof-of-reserves auditing
- Segregated customer accounts
- Exchange transparency mandates
👉 Best practices for crypto asset security
Key Takeaways
- Never trust exchanges that won't show reserves
- Beware circular financial relationships
- Cold wallets remain safest for large holdings
Conclusion
While fictionalized dialogue makes this narrative engaging, all financial facts and documents cited remain authentic. This event underscores crypto's growing pains as it matures toward institutional-grade reliability.
FAQs:
Q: Could this happen to other exchanges?
A: Absolutely—which is why proof-of-reserves became standard post-FTX.
Q: What happened to SBF?
A: He faced multiple fraud charges and awaits trial as of this writing.
Q: How can investors protect themselves?
A: Use regulated exchanges, verify reserves, and maintain control of your private keys.