How FTX Failed

FTX failed in November 2022 due to a combination of mismanagement, financial instability, and unethical practices. The primary issue was the improper use of customer funds. FTX's affiliated trading firm, Alameda Research, reportedly borrowed and traded billions of dollars from FTX's customer deposits without proper authorization. This led to a liquidity crisis when customers rushed to withdraw their funds. FTX couldn't meet the withdrawal demands, and it filed for bankruptcy shortly after, revealing a massive financial shortfall and triggering a collapse in investor trust.