what is ftx scandal

FTX was one of the largest digital currency exchange platforms for buying and selling cryptocurrencies. However, in November 2022, it was discovered that customer funds went to accounts controlled by Alameda Research, a cryptocurrency trading firm headquartered in Hong Kong, instead of FTX. After this revelation, FTX began to unravel, and when it could not pay the $8 billion gap, the company filed for bankruptcy. The collapse of FTX was due to mismanagement of funds, lack of liquidity, and the large volume of withdrawals. FTX investors filed a class-action lawsuit against FTX and its celebrity endorsers on November 15, 2022, claiming that FTX used "false representation and deceptive conduct". The collapse of FTX has kicked off investigations by the Securities and Exchange Commission (SEC) and other regulators. Samuel Bankman-Fried, the CEO and co-founder of FTX, was charged by the SEC with orchestrating a scheme to defraud equity investors in FTX Trading Ltd. . The collapse of FTX has caused investors and customers to lose billions, and not all of it will be recovered.