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The FTX Crash – What went wrong with the $32 Billion Crypto Empire?

2022 has been a roller-coaster ride in many ways. When it comes to the crypto world, the ride reached its highest & with the same acceleration, came to its lowest, leaving many of its riders in shock & terror. The ones who took a safe seat were the ones who had a balanced adrenaline rush. And those who were only the viewers missed both the terrifying and exciting parts. If you are yet to guess, this roller coaster ride is the collapse of FTX!

The world of cryptocurrency has experienced explosive growth in recent years, with the total market capitalization reaching over $3 trillion in 2022. Among the many players in this lucrative industry is Sam Bankman Fried’s $32 Billion Crypto Empire, which was in the spotlight for November and hasn’t stopped since. 

In this article, we’ll explore what went wrong with the $32 Billion Crypto Empire and examine the factors contributing to the collapse of FTX. We’ll look at the whereabouts of the entire event and consider what the future may hold for the crypto world.

What is FTX

What is FTX?


FTX is a cryptocurrency exchange founded in 2019 by Sam Bankman-Fried, a former quantitative trader at Jane Street. The exchange gained popularity in recent years due to its focus on futures trading, allowing users to speculate on the future price of various assets and its competitive FTX withdrawal fees and advanced trading features.

FTX is a digital asset exchange that allows users to buy and sell a variety of cryptocurrencies, including Bitcoin, Ethereum, and Litecoin. In addition to spot trading, the exchange offers futures contracts, perpetual swaps, and other derivative products. FTX’s primary focus is on futures trading, which allows users to speculate on the future price of various assets by entering into a contract to buy or sell an asset at a predetermined price at a future date.

In addition to its trading activities, FTX exchange also made several strategic partnerships and acquisitions to expand its operations and diversify its offerings. For example, the exchange partnered with major industry players such as the Intercontinental Exchange (ICE) and the CBOE Futures Exchange (CFE). FTX also acquired some companies, including a mobile wallet provider called Amulet and a market intelligence platform called Blockfolio.

So, this is all about the concept of FTX. Next, let’s discuss the rise of FTX. 

The Rise of FTX

The Rise of FTX


Since its launch in 2019 and before the collapse, FTX experienced rapid growth and became one of the largest cryptocurrency exchanges in the world. According to CoinMarketCap, FTX exchange ranked among the top 20 exchanges by trading volume, with a 24-hour volume of over $3 billion. The exchange also attracted significant investment, with a valuation of over $31 billion before the infamous collapse of FTX

FTX is also involved in several philanthropic efforts, including supporting charitable organizations and causes related to education, healthcare, and environmental conservation. The exchange has also sponsored various esports events and hosted a cryptocurrency-themed TV show called “Crypto Craze.”

Over just three years, FTX has achieved a valuation of $32 billion and gained the support of several prominent investors, including Paradigm, SoftBank, Sequoia Capital, and Temasek of Singapore. However, recently, venture capital firms Sequoia and Paradigm have reportedly written off their investments in FTX, valuing them at zero.

Now, you know what FTX is and how it rose to become this successful. Let us move on to understand the collapse of FTX. 

If you need some ideas about what to read next, here they are:

The Collapse of FTX

The Collapse of FTX


Before understanding the collapse in detail, you need to know that it happened because of the symbiosis of FTX & Alameda. 

What is Alameda? Alameda Research is a quantitative trading firm founded in 2013, also by Sam Bankman-Fried, CEO of FTX. Alameda Research uses advanced algorithms and high-speed trading techniques to trade a wide range of financial instruments, including futures, options, and cryptocurrencies. The company is known for its expertise in high-frequency and algorithmic trading, and it has a reputation for being one of the industry’s most successful and innovative trading firms. Alameda Research is based in San Francisco and has offices in several other locations worldwide.

In addition to its trading activities, Alameda Research is also involved in the development of financial technology (fintech) products and services. The company has created several products and platforms, including a cryptocurrency trading platform called Alameda Tech, a cryptocurrency liquidity provider called Alameda Liquidity, and a decentralized finance (DeFi) protocol called Serum.

Alameda Research is known for its commitment to research and development. The company has a team of experienced professionals dedicated to constantly improving and optimizing its trading strategies and technologies. The company also established partnerships with major industry players, such as the Intercontinental Exchange (ICE) and the CBOE Futures Exchange (CFE).

So, this is all about Alameda. You already know what FTX crypto did- As a cryptocurrency exchange, FTX provided a range of services, including the ability for users to connect their wallets, and digital trading assets, exchange cryptocurrencies, engage in derivative contracts, and purchase or sell NFTs.

The connection between FTX and Alameda revolved around a token called FTT that FTX customers could use to trade their cryptocurrency assets. Alameda acted as the primary market maker for FTT, purchasing and selling a large portion of it. Investors on the exchange were drawn to FTT due to the trading discounts it provided, and Alameda began using its FTT holdings as collateral for additional loans to support its trading endeavors. 

However, when the crypto market began to decline, the value of FTT decreased, and Alameda had difficulty paying back its creditors.

After a period of just ten days, during which Bankman-Fried frantically attempted to secure billions of dollars to rescue FTX, the exchange collapsed due to customers withdrawing their assets from the business amid concerns about its financial stability and the connection between FTX and Alameda.

The filing in a Delaware federal court included FTX’s US entity, Alameda Research, and approximately 130 affiliated companies. 

Thus, within 10-20 days, this roller coaster ride touched its peak and came crashing down at double its speed. And this is what the collapse of FTX is all about!

Next, let us figure out why the depositors have gone to panic.

Why Have The FTX Depositors Gone To Panic?


Why Have The FTX Depositors Gone To Panic?


On November 11, 2022, FTX crypto filed for Chapter 11 bankruptcy protection, and Bankman-Fried resigned. According to John J. Ray III, the new head of the cryptocurrency exchange, the collapse of FTX is caused by “a complete failure of corporate control.” Ray, who has experience with major business failures such as Enron’s collapse in an accounting scandal in 2001, mentioned in a House hearing on December 13, 2022, that FTX displayed “old-fashioned embezzlement” and that investors and creditors are not likely to recoup all of their money.

Hearing these words, any investor would panic & the same is happening with the investors of FTX. Let’s just wait & watch what the future holds for the investors. 

Why is FTX Not Allowed In The US?


Why is FTX Not Allowed In The US?


FTX is not available to users in the United States due to regulatory restrictions. In order to operate in the US, cryptocurrency exchanges must be registered with the Financial Crimes Enforcement Network (FinCEN) and comply with various state and federal regulations. FTX has yet to obtain the necessary licenses to operate in the US, so it is unavailable to US users.

Is FTX Still Trading?


Is FTX Still Trading?


FTX is a now-defunct cryptocurrency exchange. After the collapse of FTX & the following events, it isn’t allowed to trade anymore. 

So, this crypto giant isn’t trading after the crash. The crypto industry’s reputation has been harmed, and people’s trust has been shaken, but you need not worry because still, there are robust players in the industry who care about their investors, their values, & their legacies. Let us look at one such fantastic hedge fund in the next & final section. 

The Bottom Line


We have seen how this roller coaster ride created a lot of havoc in the industry this year. This brought many questions on the industry & its future, but we should remember that the industry is in the safe hands of titans like Secvolt. 

Despite the wafer-thin delicate movements in the market & industry, Secvolt (www.secvolt.com), the quant hedge fund, generated record-breaking results. With its brilliant quant models & super-effective risk management systems, Secvolt has terrific control over market volatility & clients’ portfolio movements. Owing to the same & multiple other exceptional features, this hedge fund gave year-to-date results as amazing as 262.1%. 
Thus, if you think this collapse of FTX is the beginning of the crypto industry’s doom, you are absolutely wrong. There are still contenders like Secvolt that are transparent, reliable, ethical, and serve their clients nothing but the best. Secvolt is your savior!

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Ashish Verma

Ashish Verma is the founder and CTO of Secvolt, with close to 10 years of experience in the IT industry. He has been the technical backbone of the company and has worked tirelessly to make the technical infrastructure robust. He is a passionate entrepreneur who generates solutions that have the potential to bring change.

In order to ease the client’s interaction with Secvolt, he has strived to develop the business’s technological foundation and establish a user-friendly platform. Ashish has also contributed substantially to smoothening the company’s administration and ensuring that there are no lacunae in the broad structure of the organization. 

Early Years

Coming from a middle-class family, he was aware of the problems that people faced while using technology. He sought to create something that was simple to use yet had a powerful effect. As he studied computer science, he became eager to offer a solution to real issues. He began his professional career at Amdocs, where he gained expertise in client management while catering to more than 20 clients. Later, he moved to Citicorp, where he had exposure to the investment industry. His time at Amdocs and Citi enabled him to produce high-standard, efficient, and scalable technical infrastructure.

He left corporate jobs for his startup because he was passionate about working on the concept of a smart city platform. He expanded the concept internationally and even collaborated with Global Dignity-Kuwait. Things didn’t work out for him the first time. He states, “My failures didn’t stop me from experimenting and trying new things.” He rose from the ashes like a phoenix and founded FewerClicks, an End to End IT solution company.

He worked on the creation of Solster Finance, a decentralized financial platform based on the Solana blockchain. He created this platform single-handedly which has helped the team raise a $1M investment and a revenue of more than $5M within 6 months of launching. 

He has previously worked on many blockchain technologies and cryptocurrency ventures, which include Decentralized Finance Applications (Defi), Decentralized Applications (Dapps), File Contracts (SIA, record-keeper), Smart Contracts (rust, solidity), and NFT Development. His experience and effective communication have helped many team members understand Secvolt effectively and the underlying technology it is powered by.

He possesses the ideal combination of strategic thinking and excellent business insight. He is responsible for formulating technical aspects of the company’s strategy to guarantee alignment with business objectives. With his drive to experiment with new technologies, he has helped Secvolt achieve a competitive edge. Being in charge, Ashish never holds back in encouraging the different departments to make profitable use of technology, helping to grow as an unstoppable team at Secvolt!

Hanif Shaikh

Hanif Shaikh is the founder and CMO of Secvolt, with over 8 years of experience in the industry. He plays a crucial role when it comes to the growth of Secvolt. Since the beginning, he has acted as a mentor for each and every employee of the company, and he makes an effort to be accessible to his staff anytime they need him. 

Hanif first entered the Blockchain and Crypto world in 2016, and nothing has stopped him since. He views blockchain as a transparent platform that provides authority and accountability back to the people. He consistently believes that “overcommunication is better than miscommunication.” He has lived by this motto with his staff, clients, and networks.

Early Years

Hailing from Gujrat, a state in India, he is following his dream to contribute to making this world a better place. In the process, he has struggled, made some mistakes, and learned lessons from those mistakes to achieve success in life. His entrepreneurial attitude dates back to his childhood when he learned from his father’s business and aspired to have it all. He came from a humble background and had ambitions to succeed in life.

He has developed two successful businesses from scratch, and in the process, he has inspired young people to start their own businesses. He was an integral part of the Quora Mumbai Meetups and helped it become a great success in a short period of time. Later, he began organizing meetups to raise awareness about blockchain, cryptocurrencies, and their applications. He also shared his knowledge of ICOs, highlighted reputable ICOs, and established a small cryptocurrency community on WhatsApp groups.

He chose to go on a Blockchain Tour in India in 2019 and met some fascinating people. Throughout his journey, he has been able to build an extensive and robust network that has aided Secvolt’s growth. Because of his expertise and understanding of the Crypto Industry, he has been featured on several news channels and has advised the youth on the subject.

He is in charge of the company’s marketing operations and is responsible for developing its marketing strategy and vision. He oversees a group of passionate marketing professionals and plans promotional strategies with the goal of making  Secvolt a global brand. 

He is a perfect blend of a practical attitude and innovative business acumen. He believes in the ability of individuals to perform exceptionally well when given an environment to experiment and explore their passions; a culture that he has built at Secvolt.

Divakar Choudhary

Divakar Choudhary is the founder and CEO of Secvolt who has been trading for more than six years now. He started the business in 2018 with the conviction that if anybody could dominate the market, it was him. He poured all of himself into the business and turned Secvolt into a market-beating machine.

Divakar developed the fundamental quant models that perform risk management and capture alpha using his skills from the previous organization and his time spent in the market. In order to make the system effective, he backtested risk mitigation algorithms and worked on them for more than 4 years to produce results.

Early Years

He began his crypto journey in 2013 after getting his first gaming Laptop and melded in with the Blockchain community like sunbeams on the ocean. He created many YouTube channels at the age of 15 and businesses by the time he was 17. Technology has always piqued Divakar’s interest. He endeavored and succeeded at freelancing in his effort to achieve financial independence. However, he soon realized that freelancing would always keep him in the rat race, and the only way out would be to build a machine yielding generational wealth.

Soon, he started trading using his own capital but suffered a loss in the market. He says, “95% of people lose money & the rest 5% make money from the loss of those 95%.” He then began working on an effective technique to be included in this 5% after losing part of his own assets during the early stages of trading. He began evaluating quant strategies using statistical models.

With his methodology, he once produced a 20% ROI in a single month. With the zeal of creating something exceptional, he borrowed money from friends and family and generated decent returns for them using primitive quant models. Month after month, the system’s efficiency and the competence of the man behind it allowed for excellent market returns.

In the beginning, Divakar worked on his laptop for over 18 hours. It took every ounce of his energy as he executed about 530+ deals daily for 4 years to create this company from the ground up. In 2021, he increased his volume by 827%, trading a total of $52 million and hitting a single account.

In his words-

“What does becoming “THAT” GUY mean to you? Who did you need when you were young? Be that person!”

He is a perfect example of someone who followed his passion and made a fortune from it! He dreamt of creating generational wealth as a youngster, envisioned it as an adult, and is now making it a reality with Secvolt!