Andrea Ortiz Gracia November 23, 2022

Kurt A. Schindler FINA 3107-007

FTX Reaction

If something tells us the failure of FTX is that history repeats itself. We have previously

studied the crisis of 2007-2008, which was caused by the aftermath of risky loans, and before

that the accounting scandal of Enron, which led to the creation of more rigorous internal control

measures. Nonetheless, we may understand more about the failure of FTX since we witness

from the beginning how cryptocurrencies began to gain popularity and are now their downfall.

As Ray, a bankrupt specialist said, “Never in my career have I seen such a complete

failure of corporate controls and such a complete absence of trustworthy financial information as

occurred here”. This tells us that the collapse of FTX, one of the largest cryptocurrency

exchanges, was going to happen sooner or later. We may think that an investment is safe, but we

don’t know what happens behind closed doors. In this case, information leaked that Alameda,

FTX’s hedge fund, was making risky loans raised concerns and eventually caused investors to

panic. However, the problems between Alameda and FTX ran deeper than anyone thought,

bringing FTX to its evident downfall.

This is sad since not everyone is going to get their money back, especially does who

decided to invest their very hard work-earned money. I believe this is evidence, that there should

be more rigorous internal control measures for the digital asset market. Finally, as people say one

man's loss is another man's gain. By this, I mean that the collapse of FTX is a triumph for

decentralized finance, where computer codes are used to build versions of financial services that

don’t rely on trust or a central party.