This story was originally published on HackerNoon at:
https://hackernoon.com/revisiting-the-ponzi-patterns-behind-ftxs-notorious-collapse.
FTX’s $10B empire collapsed like a Ponzi scheme. Here’s how leverage, FTT, and diversion triggered one of crypto’s biggest crashes.
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This research uses a Ponzi model to explain the fall of FTX, which at its height was the third-largest centralized cryptocurrency exchange in the world. We demonstrate how the combination of three key drivers—its native token FTT, unsustainable borrowing, and reserve diversion—exacerbated instability and finally led to insolvency in November 2022.