Home Featured Dramatic collapse of the cryptocurrency exchange FTX contains lessons for investors but won’t affect most people

Dramatic collapse of the cryptocurrency exchange FTX contains lessons for investors but won’t affect most people

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Dramatic collapse of the cryptocurrency exchange FTX contains lessons for investors but won’t affect most people


D. Brian Blank Mississippi State University Brandy Hadley Appalachian State University 

It is easy to make or lose large amounts of money in the quick-paced world that is cryptocurrency. FTX was the second largest cryptocurrency exchange and had a value of more than US$30 million in early November 2022. FTX, along with over 100 companies that were connected to it, was in bankruptcy proceedings by Nov. 14. Brandy Hadley and D. Brian Blank are professors in finance, investing, and fintech. They explain how and why this incredible collapse happened, what effect it might have on the traditional financial sector and whether you need to care if you don’t own any cryptocurrency.

1. What happened?

Sam Bankman-Fried, a 2019 founder of FTX was responsible for one the most important cryptocurrency exchanges.

Many crypto investors trade and keep their cryptocurrency on FTX, which is similar to the New York Stock Exchange. Alameda Research is a hedge fund that invests in crypto and cryptocurrencies. Bankman-Fried was also the founder.

In the traditional financial industry, these companies would be distinct or at most have divisions and firewalls. But…



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