The Rise and Ruin of FTX: Lessons Every Investor Must Know

What the FTX Collapse Teaches About Greed, Innovation, and the Need for Oversight

The story of FTX is a rollercoaster of ambition, innovation, and ultimately, ruin. Michael Lewis’s 'Going Infinite' provides a gripping inside look at how a group of brilliant young minds, led by Sam Bankman-Fried, built one of the fastest-growing crypto exchanges in history—only to see it all come crashing down. The early days of FTX were marked by relentless innovation: new trading products, lightning-fast execution, and a promise to democratize finance. Investors flocked to the platform, lured by the charisma of SBF and the promise of outsized returns.

But beneath the surface, warning signs abounded. FTX operated in a regulatory gray zone, with little oversight and a culture that rewarded risk-taking above all else. The leadership team, many of whom were effective altruists, believed they were on a mission to change the world—and that sometimes, rules could be bent for the greater good. As the platform grew, so did its exposure to risky bets and opaque financial practices. Investors, dazzled by the hype, often failed to ask hard questions or demand transparency.

When the collapse finally came, it was swift and brutal. A liquidity crisis triggered mass withdrawals, revealing that FTX did not have the reserves to cover customer funds. Billions were lost overnight, and the shockwaves rippled through the entire crypto industry. Regulators, previously content to let innovation flourish unchecked, suddenly sprang into action, launching investigations and calling for new rules to protect consumers.

The lessons for investors are stark. First, due diligence is non-negotiable: no amount of charisma or innovation can replace the need for transparency and accountability. Second, skepticism is healthy—even the smartest founders can make disastrous mistakes. Third, regulation is not the enemy of innovation; it’s a necessary safeguard against the kind of unchecked risk that brought down FTX.

'Going Infinite' is a sobering reminder that the line between genius and recklessness is thin, and that the pursuit of impact, however noble, must always be grounded in responsibility. For anyone investing in crypto—or any emerging market—these lessons are more relevant than ever. 1 2 4