Why FTX Failed and What to Do About it

Thursday, November 24, 2022 • 12:20 EST

They shouldn’t lose money. FTX could be the exchange promising Insane Financial Product™ and Alameda could make the market on FTX for Insane Financial Product™. The more I read, the more my head spins and the more I keep asking myself: how did they manage to lose so much money? Billions of real-life fiat money. They’ve lost all sorts of money. Even if your directional hedge fund is making a lot of really bad trades and even if your exchange is really bad at evaluating your customer risk and even if your brokerage is really bad at allowing for margin and even if your market-maker is really bad at making prices, when you have control over all of them in markets that you control…how do you lose all that money? Ranjan here and in today’s post I’m going to try to write about FTX. The whole story gets even more confusing because the corrupt relationship between Alameda and FTX should’ve given them an additional unfair edge at making even more riskless money. (readmargins.com). Continue reading.

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