FTX

What was FTX?

FTX Trading Ltd. was a highly successful global cryptocurrency exchange founded in 2019 by Sam Bankman‑Fried (SBF) and Gary Wang. At its peak, FTX was the third-largest exchange by volume, handling over US$10 billion daily and serving more than 1 million users :contentReference[oaicite:1]{index=1}. With a sleek interface, deep liquidity, and innovative products like tokenized stocks, leveraged products, spot and derivatives markets, it was trusted by retail and institutional clients alike.

FTX’s services included spot and futures trading, leveraged tokens, prediction markets, OTC desk, and a U.S. arm—FTX US—targeting North American regulation. The platform provided advanced trading tools, on-chain staking options, and API access for automated strategies.

Why did FTX go bankrupt?

1. **Commingling of Funds**: FTX had no separation between customer deposits and Alameda Research’s trading account, leading to illicit funding flows :contentReference[oaicite:2]{index=2}.
2. **Liquidity Crunch**: A coincident sale of FTT token by Binance triggered a run on FTX, resulting in US$6–8 billion in withdrawal requests over two days :contentReference[oaicite:3]{index=3}.
3. **Lack of Internal Controls**: The firm used QuickBooks for billion-dollar books, with no sound accounting or risk oversight :contentReference[oaicite:4]{index=4}.
4. **Regulatory Bankruptcy**: On November 11, 2022, FTX and 100+ affiliated entities filed for Chapter 11 in the U.S., as Sam Bankman‑Fried resigned and a liquidity hole of ~US$8 billion was revealed :contentReference[oaicite:5]{index=5}.
5. **Criminal Fraud**: SBF and others have been convicted for leveraging customer funds to prop up Alameda’s positions and mislead investors—called ‘one of the biggest frauds in recent U.S. history’ :contentReference[oaicite:6]{index=6}.

Key Features (When Operational)

• Spot, futures, and leveraged tokens across multiple assets
• High liquidity, tight spreads, and low fees
• API-driven trading, staking, and savings programs
• User experience that catered to both beginners and institutional users

Use Cases

• Trading and hedging via spot and derivatives
• Crypto payment gateway solutions
• Institutional prime brokerage-like execution
• Yield generation via staking and savings

Frequently Asked Questions

How did FTX's collapse highlight the need for better accounting controls?

FTX’s bankruptcy was driven by poor fund segregation, outdated record-keeping, and lack of internal controls. Cryptoworth’s software is designed to prevent such failures through automated account reconciliation, cost basis tracking, and segregation workflows.

Can Cryptoworth recover data from FTX for accounting purposes?

Depending on data availability, Cryptoworth can import user transaction histories, withdrawals, and asset statements to reconstruct cost-basis, unrealized/realized P&L, and support bankruptcy claims.

Will integrating Cryptoworth reduce counterparty risk?

Yes. By providing complete journal automation, asset flow tracking, and audit logs, Cryptoworth helps institutional teams maintain strong internal control frameworks, avoiding the FTX-style obfuscations that amplified risk.