FTX Anniversary: Reflecting on the glorious days before November 3, 2022

This series of articles was jointly completed by media partners: Zombit, CryptoResearch, Grenade, and CryptoCity.

November 3, 2022, U.S. media CoinDesk exposed financial issues at FTX, which led to a series of storms in the cryptocurrency industry. The world's second-largest exchange FTX was revealed to have misappropriated assets, and a few days later, it declared bankruptcy, leaving FTX users unable to recover their assets, resulting in significant losses or closures for many enterprises with investment or lending relationships with FTX.

Nearly a year later, CoinDesk's reporting won the prestigious U.S. business journalism award, the " Gerald Loeb Award," and former cryptocurrency star - FTX founder Sam Bankman-Fried, also known as SBF, has been imprisoned and several executives have confessed.

November 2023, let's look back on the rise and fall of the FTX empire and its impact on the overall industry.

"FTX One-Year Anniversary - Rising Chapter"

A Rising Star! Why is FTX So Popular?

Established in May 2019, the global exchange FTX, which started in Hong Kong, also expanded to Taiwan in the same year. Despite the small population base in Taiwan, there was significant enthusiasm for FTX, with peak trading volumes exceeding 10% coming from Taiwanese users. Consequently, Taiwanese investors suffered significant losses after FTX's collapse.

Why did so many Taiwanese users like to use FTX?

It is closely related to its positioning as "built for traders." Here are the key features of FTX:

1. Withdrawals without trading fees: Initially, users could withdraw assets from FTX without fees. Subsequently, as the amount of staked $FTT tokens increased, corresponding withdrawal limits were added. Due to the relatively low cost of withdrawing tokens compared to other exchanges, FTX became the preferred "funds parking station" for large holders on the chain.
2. Smooth experience with spot leverage, increasing capital utilization: The aforementioned feature of fee-free withdrawals attracted many high-net-worth users to FTX. Another key feature is "spot leverage," where users can easily withdraw cryptocurrencies they do not hold on FTX. By leveraging this type of borrowed funds, users can increase their capital utilization without risking their principal, allowing for risk-free arbitrage. Therefore, during periods of high market sentiment, FTX became popular among many large holders.
3. "Cross-currency margin" contract trading: In traditional exchanges, when conducting contract trading, users often need to differentiate between "funding accounts" and "contract accounts." However, FTX allowed traders to directly use spot assets as collateral for contract trading, maximizing the potential of users' spot assets and further enhancing capital efficiency.

Many of FTX's features and services at the time brought new dynamics to the market. Perhaps it was due to individuals like SBF who came from Wall Street trading institutions, understanding clearly how to improve traders' user experience and adjustments, which attracted a large number of users enthusiastic about trading during the bull market in 2020.

Memories of FTX's Loyal Users

FTX's success is closely related to the product itself and the platform's positioning. An anonymous industry insider interviewed stated that many of FTX's features are designed for traders and are quite practical in operation. For example, the ability to open multiple accounts with the "sub-account function" is very convenient for traders:

"On other exchanges, this function often requires certain qualifications to be met before it can be activated, but on FTX, everyone can use it. This is quite convenient for traders to divide their investment positions (such as long and short positions)."

On the other hand, the full-margin guarantee allows speculative traders to use unused spot assets as collateral, increasing capital efficiency. Before FTX's collapse during the bull market, this feature provided users with significant leverage, making it easy for users to make money and naturally retain their positions. Additionally, the interviewee added that high savings rates were also an attractive factor:

"An annualized rate of 6% seems reasonable but also raises suspicions, becoming a lure for many users to deposit assets into FTX."

Another interviewee with frequent transfer needs mentioned that zero withdrawal fees were the main reason for using FTX, especially during periods of high gas fees in the bull market, which could save a considerable amount of on-chain costs. However, he also lamented that he never expected to end up losing big due to small mistakes.

In addition, both interviewees also unanimously stated that FTX's diverse products, such as volatility contracts, Trump contracts, and equity tokens, were unique assets not commonly found on other platforms.

FTX's Past Glorious Records

2019 was a foundational year for FTX. During this year, FTX launched the exchange ecosystem token $FTT, leveraged tokens, and perpetual contract functions. Not only did it complete an $8 million seed round financing, but on December 20th of the same year, it received a strategic investment from the largest exchange, Binance. Since that day, FTX Exchange began a period of explosive growth.

Fast forward to 2020, FTX Exchange began to shine. As it rapidly expanded, it also started to connect with prominent figures in U.S. politics and business:

• January: FTX Exchange's 24-hour trading volume surpassed $20 billion, setting a historical record since its establishment.
• February: Introduced a contract TRUMP-2020, tokenizing the election predictions during the U.S. presidential election, which rose by 24% after opening.
• March: Received Series B investment from Beijing's venture capital firm Liquid Value Capital.
• April: Launched WTI crude oil futures contract OIL.
• May: Introduced the U.S.-based trading platform FTX.US.
• August: Recruited Sina Nader, former crypto chief at Robinhood, as COO of FTX.US, and acquired the mobile cryptocurrency asset management app Blockfolio for $150 million.
• November: During the U.S. presidential election, founder SBF allegedly donated $5.2 million to candidate Biden.

2021 marked the beginning of the bull market in the cryptocurrency market. It was undoubtedly the fastest-growing and most aggressively marketed year for FTX. FTX chose a marketing path commonly used by Web2 giants - sports. It not only enlisted numerous sports stars as brand ambassadors but also splurged on advertising and sponsorship:

• February: Announced the establishment of a charitable foundation and launched fee-free withdrawal services, becoming the preferred choice for many investors for deposits, transfers, and transactions without gas fees.
• April: FTX.US subsidiary signed a 19-year, $135 million exclusive home court naming rights deal with the NBA's Miami Heat, and launched the Coinbase Pre-IPO product, with daily trading volumes exceeding 10% of the global total, an 8000% increase from the previous year.
• May: Following the previous year's election prediction tokenization, introduced futures contracts predicting the results of Brazil's presidential election and announced investments in the development company Circle, which is behind the well-known stablecoin $USDC, and a collaboration with the International Chess Championship.
• June: Signed a $210 million deal with the well-known U.S. esports club TSM, securing the team naming rights (Team SoloMid FTX), sponsored the Wall Street cycling race, collaborated with the MLB, and brought in NFL legendary quarterback Tom Brady and his wife as investors.
• July: Completed a $900 million Series B funding round with a valuation of $18 billion, setting a record for the largest funding round in entrepreneurial history.
• August: Recruited former legal advisor to the U.S. SEC Chairman, Ryne Miller, increased Bitcoin futures market share to second place, signed a 7-year sponsorship contract with the "League of Legends" LCS league, and named the Berkeley University California Memorial Stadium.
• September: Enlisted NBA star Stephen Curry as a global ambassador and shareholder, signed a long-term sponsorship agreement with the F1 team Mercedes-AMG Petronas, and, affected by China's cryptocurrency ban, relocated its headquarters from Hong Kong to the Bahamian capital of Nassau.
• October: Became the official partner of the International Cricket Council, completed a $420 million Series B-1 financing round with a valuation of $25 billion, with notable asset management giants like BlackRock and Tiger Global participating.
• November: Recruited MLB star Shohei Ohtani as the global brand ambassador for FTX, recruited former CFTC Commissioner Mark Wetjen as FTX.US's Head of Policy and Regulatory Strategy.
• December: Enlisted golfer Albane Valenzuela as a sports ambassador, sponsored the NBA's Golden State Warriors with $10 million, and CEO SBF was invited to attend a U.S. congressional crypto hearing.

Finally, in 2022, FTX set its strategic goals for overseas markets, including Japan, Europe, and other countries/regions, making them key areas for marketing and business expansion. SBF appeared more frequently in major foreign media outlets such as The New York Times, The Wall Street Journal, Forbes, and Bloomberg, reaching unprecedented levels of exposure:

• January: FTX.US and FTX separately completed $400 million Series A and C funding rounds and announced the launch of a $20 billion venture capital fund, FTX Ventures.
• February: In a bid to enter the Japanese market, acquired the compliant exchange Liquid's parent company, Quoine, and while attending a U.S. Senate crypto hearing, spent $32.5 million on advertising during the 56th Super Bowl in the U.S., setting the record for the highest crypto advertising expenditure.
• March: Launched the charity fund FTX Future Fund, established FTX Europe and FTX Australia to enter the European and Australian markets, enlisted Japanese tennis star Naomi Osaka as FTX global ambassador, participated in the financing of Yuga Labs, the parent company of "Bored Ape Yacht Club," and more.
• April: SBF ranked 2nd on the Forbes Crypto Billionaires list, hosted the Crypto Bahamas conference officially in the Bahamas, with attendees including former UK Prime Minister, former U.S. Presidents, the Prime Minister of the Bahamas, Super Bowl champions, former CFTC Chairman, Ark Invest CEO Cathie Wood, and others.
• May: SBF and FTX regulatory team visited the White House, and SBF was selected as one of Time magazine's "100 Most Influential People in the World," while surpassing Coinbase in market share, becoming the world's second-largest cryptocurrency exchange.
• June: Launched FTX Japan for domestic trading in Japan, acquired Bitvo to enter the Canadian market.
• July: FTX.US plans to raise $680 million in loans and acquire BlockFi, leading a financing round for Aptos.
• August: CNBC reported that FTX revenue exceeded $1 billion.
• September: Former CFTC Commissioner joins FTX.US board, invests in Sui developer Mysten Labs, NFT project Doodles, plans to acquire 30% stake in SkyBridge Capital, and Celsius assets. Also won the bid in Voyager's asset auction.

FTX Exchange at its peak was indeed flourishing, even being seen as having the potential to reach the top spot as the world's number one exchange. From the numerous records and achievements set by FTX, it is evident that FTX's successful marketing had a profound impact on the cryptocurrency market. Therefore, the reaction of the crypto community to FTX's closure shortly after, was more of shock, disbelief, and deep regret.

FTX One-Year Anniversary - Global Scam Unveiled

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