The FTX Bankruptcy Is Crypto's Biggest Scandal Ever

Plus, "Bitcoin tourists" flee the market.

Number of the Week: 2 million (explanation below)

The FTX Bankruptcy Is Crypto’s Biggest Scandal Ever

On January 1, 2022, if you had asked anyone in the crypto world what the most earth-shattering event this year would be, the most likely answer would have been how long the crypto winter would last, or perhaps the Ethereum merge, which simultaneously was a big deal yet so far has changed very little.

By contrast, very few people’s crypto bingo cards had an entry reading “The world’s second-largest, and one of its most-respected, crypto exchanges will buy up a bunch of bankrupt crypto companies in the spring, only to find itself bankrupt in November with very serious allegations of embezzlement surrounding its once-prestigious founder and CEO.”

With the possible exception of Elizabeth Holmes and Theranos, it’s hard to think of a harder corporate downfall than that of Sam Bankman-Fried and FTX. And even Holmes’s ultimate descent took months of investigative and prosecutorial investigation before the company evaporated; FTX fell apart in a couple of days, almost entirely as a result of a single news story and some skeptical tweets (plus, you know, being bankrupt, which became official on November 11).

Moreover, while of course Holmes had her high-octane board of directors and prestigious investors, no one could match the reach by which FTX and Bankman-Fried attempted to influence American life, finance and public policy over a very short time period. Consider: