SAD_
Autopsy report

FTX

FTT | Centralized exchange
Custody failureDied Nov 2022

A top-three exchange lent customer deposits to its sister trading firm, Alameda, whose balance sheet leaned heavily on FTT, a token FTX itself issued. A leaked balance sheet in early November 2022 triggered a bank run, and FTX filed for bankruptcy days later.

Missed warning signs
  1. 1-1y
  2. 2-1y
  3. 3-8d
  4. XDeath

Spacing is ordinal, not to scale. Numbers match the list below.

  1. 1

    No independently audited financials or proof of reserves were published.

    Visible 1 year before death | No proof of reserves

    Reuters

  2. 2

    The exchange and its trading firm shared an owner, with no visible separation of customer assets.

    Visible 1 year before death | Opaque books and affiliates

    CoinDeskReuters

  3. 3

    A leaked balance sheet showed Alameda holding large amounts of FTT, a token FTX itself issued.

    Visible 8 days before death | Backed by its own token

    CoinDesk

The lesson

A token the borrower prints is not collateral. It is a feedback loop.

Sources
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Editorial summary of public reporting. Allegations are labeled as allegations. Not financial or legal advice.

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