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SSRN Paper on FTX Collapse
webCredibility Rating
3/5
Good(3)Good quality. Reputable source with community review or editorial standards, but less rigorous than peer-reviewed venues.
Rating inherited from publication venue: SSRN
Tangentially relevant to AI safety as a case study in governance failure and the risks of deploying powerful systems without adequate oversight; FTX's collapse also affected EA-aligned funding streams that supported AI safety research.
Metadata
Importance: 22/100working paperanalysis
Summary
This SSRN paper analyzes the collapse of the FTX cryptocurrency exchange, examining the governance failures, fraud, and regulatory gaps that enabled one of the largest financial frauds in history. It draws lessons for oversight of crypto markets and financial institutions more broadly.
Key Points
- •Examines how FTX's collapse revealed fundamental failures in corporate governance, auditing, and regulatory oversight of crypto exchanges
- •Analyzes the commingling of customer funds between FTX and Alameda Research as a central mechanism of fraud
- •Discusses regulatory gaps that allowed FTX to operate with minimal oversight compared to traditional financial institutions
- •Draws broader lessons for how crypto markets should be regulated to protect consumers and financial stability
- •Relevant to AI safety community as a case study in how rapid capability deployment without adequate oversight can lead to catastrophic failures
Cited by 1 page
| Page | Type | Quality |
|---|---|---|
| FTX | Organization | 74.0 |
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# The Collapse of FTX: The End of Cryptocurrency’s Age of Innocence
15 PagesPosted: 5 Dec 2022Last revised: 14 Dec 2022
[See all articles by Thomas Conlon](https://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=1566904 "View other papers by this author")
## [Thomas Conlon](https://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=1566904 "View other papers by this author")
University College Dublin
## [Shaen Corbet](https://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=2200102 "View other papers by this author")
Dublin City University ; University of Waikato - Management School
## [Yang Hu](https://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=3673435 "View other papers by this author")
University of Waikato - Management School
Date Written: December 14, 2022
### Abstract
The sudden collapse of the FTX exchange appears to have unearthed several fundamental ethical, regulatory, and policy-based flaws, inherently damaging the cryptocurrency industry at large. The following research briefly outlines the key events that led to the bankruptcy of FTX while examining industry-wide implications as a consequence of an acute risk management failure. Results indicate severe risk and liquidity imbalances between the assets and liabilities of FTX, which manifested directly in the collapse of the exchange, and subsequently led to contagion effects across a range of financial market products. The insolvency of FTX should serve as a significant warning to policymakers and regulators, specifically surrounding the valuation, reserving, and corporate usage of permissionless, privately-issued cryptocurrencies.
**Keywords:** Cryptocurrency; Exchange; Tokens; Corporate Failure; Fraud.
**Suggested Citation:** [Suggested Citation](https://papers.ssrn.com/sol3/papers.cfm
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