HACKER Q&A
📣 eaglehead

What the heck happened to FTX? (ELI5)


Alright, I just crawled from under a rock.

Reading all these articles and tweets about FTX and Binance -- and frankly I have no freaking idea what is the background.

So would any kind soul enlighten me on what's the backstory here?

PS: I think there is a should be a service that provides you a background for any given news article. You paste in the url and it gives you the "need to know before you read this story"

  👤 wmf Accepted Answer ✓
https://newsletter.mollywhite.net/p/ftx-explainer
👤 russfink
This also is good. I googled “ELI5 FTX”. Regarding the comment below, Binance was asked to buy FTX, and they inspected their books - and found $6B missing. Whether that was embezzlement or poor reinvestment, I don’t know.

https://www.reddit.com/r/explainlikeimfive/comments/yr3ypv/c...

👤 Maursault
Pretty confusing, but finance always seemed like voodoo to me.

Here is an explanation that seems biased against CZ (Changpeng Zhao).[1]

Here is an explanation that seems biased against SBF (Sam Bankman-Fried).[2]

[1] https://www.youtube.com/watch?v=DSLmnH0QKPk

[2] https://www.youtube.com/watch?v=CnbDeQRsMJY

👤 legitster
Super oversimplification:

FTX was an exchange for Cryptos. No problems there. They also offered a coin of their own. Also, no problems.

But then they borrowed a bunch of money against the value of their coin. Fundamentally not good, because it means they now owe customers more money than the customers put in.

There was also a trading house that they ran on their own exchange, a competitor who might have triggered the collapse as a prank (Binance), and an over exuberant owner who always seemed to be above this sort of mess.