2022/12/19 by Shange Fu, Qin Wang, Fu, Shange +5 · 1 citation
Computer Science · #Blockchain Technology Applications and Security #Computer Science and Game Theory (cs.GT) #Cryptography and Security (cs.CR) #FOS: Computer and information sciences
paper · pdf · doi:10.48550/arxiv.2212.09436
openalex publication_date 2022/12/19 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28
FTX used to be the third-largest centralised exchange (CEX) in crypto markets, managing over $10B in daily trading volume before its downfall. Such a giant, however, failed to avoid the fate of mania, panic, and crash. In this work, we revisit the FTX's crash by telling it as a Ponzi story. In regards to why FTX could not sustain this Ponzi game, we extract and demonstrate the three facilitators of the FTX collapse, namely, FTT, leverage, and diversion. The unfunctionality in each factor can iteratively magnify the impact of damages when the panic is triggered. Rooted in the unstable ground, FTX eventually suffered insolvency and rapidly crashed in Nov. 2022. The crisis of FTX is not an isolated event; it consequently results in the collapse of a chain of associated companies in the entire crypto market. Recall this painful experience, we discuss possible paths for a way forward for both CeFi and DeFi services.