It's been nearly 6 months since the complete collapse of FTX, formerly one of the largest cryptocurrency exchanges in the world. The company failed because the owner, Sam Bankman-Fried (SBF), had been essentially stealing money from the exchange in order to prop up his other project - Alameda. Since filing bankruptcy, the company's assets have been sold and the new owners have been looking for and sometimes finding some of the missing assets, which has created a positive environment within the company.
What was FTX?
FTX was a cryptocurrency exchange based in Hong Kong. It was founded in 2017, and quickly became one of the top exchanges in the world with millions of active users, high liquidity, and competitive fees. The platform offered a variety of trading options including spot trading, derivatives, futures, and margin trading.
However, FTX also relied heavily on its parent company Alameda for funding. Unfortunately, the management of both companies was heavily linked and it became apparent that FTX's founder had been secretively funneling money from FTX to prop up his other struggling project - Alameda. This led to a crisis when in 2022, FTX declared bankruptcy, leaving its customers with huge losses and debts.
In fact, many depositors were locked out of their assets, leaving them with huge losses in a seeming black hole. Some users were able to get their assets out of the system, while others were completely locked out in an effort to prevent a run on the system, similar to what recently took down Silicon Valley Bank.
The current FTX
The new FTX seems to be trying to fix the problems of its predecessor. As part of a forensic audit of the company, some communications from SBF were uncovered, showing exactly what a chaos generator he and the company were. In one communication, he described the company saying,
We sometimes find $50m of assets lying around that we lost track of; such is life.
When you're in a position where you can just lose $50 million worth of assets as a normal part of doing business, you're not doing business - you're losing your mind. A real business person cannot handle losing a penny, let alone misplacing millions in assets.
But, some of these missing assets have begun to reappear. The company has been searching, possibly in couch cushions, and have recovered over $7 billion worth of lost assets and cash. It was originally estimated that the company was missing around $2 billion worth of assets, so finding over $7 billion (and suggesting that it's not everything) is a massive red flag on the previous team.
However, the new management seems to think that things have leveled out. In fact, they have told the bankruptcy court that they are working with their creditors to determine if the FTX trading platform can reopen for business. Of course, the company will have a huge uphill battle convincing people to trust the platform again. After losing billions of customer funds, the brand might not be salvageable. But, as you can still create a Hi5 social media profile, it might not be completely crazy.