FTX was a centralized cryptocurrency exchange that played a prominent role in global digital asset markets before its collapse in 2022. Founded in May 2019 by Sam Bankman-Fried and Zixiao “Gary” Wang, FTX grew rapidly to become one of the largest crypto trading platforms by volume. The exchange is now defunct and is undergoing bankruptcy proceedings following one of the most significant failures in the history of the cryptocurrency industry.
Overview
FTX operated as a full-service cryptocurrency exchange offering spot trading, derivatives, options, leveraged tokens, and a range of advanced trading products. The platform served both retail and institutional clients and was known for its focus on professional traders, providing deep liquidity, custom margin products, and complex derivatives tied to digital assets.
The company was incorporated in Antigua and Barbuda and headquartered in The Bahamas. At its peak, FTX reported millions of registered users globally and was considered a major competitor to other leading centralized exchanges.
History and Background
FTX was launched in 2019 by Sam Bankman-Fried, a former quantitative trader, and Gary Wang, a software engineer with experience in large-scale systems. Bankman-Fried was also the founder of Alameda Research, a crypto trading firm that played a significant role in FTX’s early liquidity and market-making operations.
The exchange experienced rapid growth between 2020 and 2022, driven by expanding crypto market participation, aggressive product development, and global marketing efforts. FTX secured high-profile sponsorships and partnerships, including naming rights deals and endorsements that significantly raised its public profile.
On November 11, 2022, FTX and a large number of affiliated entities filed for Chapter 11 bankruptcy protection in the United States. The filing followed a liquidity crisis and revelations regarding internal controls, risk management failures, and the misuse of customer funds.
Core Products and Services
- Spot Trading: Markets for major cryptocurrencies and tokens with fiat and crypto trading pairs.
- Derivatives: Futures, perpetual contracts, and options products tailored to advanced traders.
- Leveraged Tokens: ERC-20 tokens designed to provide leveraged exposure without direct margin management.
- OTC and Institutional Services: Over-the-counter trading and account services for large clients.
Technology and Platform Features
FTX emphasized performance and flexibility in its trading infrastructure. The platform supported advanced order types, cross-margining, and customizable risk parameters. Its matching engine was designed to handle high throughput and low latency, catering to professional trading firms and high-frequency traders.
The exchange also developed proprietary indices, tokenized equities, and prediction-style markets, although some offerings were limited or restricted in certain jurisdictions.
FTT Token
FTX issued a native utility token known as FTT. The token was used for trading fee discounts, collateral within the platform, staking benefits, and participation in ecosystem incentives. FTT played a central role in FTX’s balance sheet and corporate structure, which later became a focal point during bankruptcy proceedings.
Collapse and Bankruptcy
FTX’s collapse was triggered by a loss of market confidence, liquidity shortages, and disclosures that customer assets were improperly commingled with Alameda Research. Following these events, withdrawals were halted, and the company filed for bankruptcy protection.
Subsequent investigations revealed severe governance failures, lack of internal controls, and inadequate financial reporting. Sam Bankman-Fried was later charged by U.S. authorities in connection with the collapse, while bankruptcy administrators began a complex process of asset recovery and creditor claims.
Impact on the Crypto Industry
The failure of FTX had far-reaching consequences across the crypto ecosystem. It led to significant losses for users, investors, and counterparties, triggered broader market declines, and intensified regulatory scrutiny of centralized exchanges worldwide.
The event is widely regarded as a turning point for the industry, accelerating calls for improved transparency, proof-of-reserves practices, stronger governance standards, and clearer regulatory frameworks.
Risks and Considerations
FTX’s collapse highlighted the risks associated with centralized crypto platforms, including custodial risk, opaque financial structures, and conflicts of interest. Ongoing bankruptcy proceedings mean that outcomes for creditors and customers remain subject to legal and regulatory processes.
The legacy of FTX continues to influence discussions around exchange regulation, consumer protection, and the long-term structure of digital asset markets.
