Remembering FTX: How the collapse shaped crypto’s future

Tracing centralized missteps to the industry’s push for transparency and stability

article-image

Artwork by Crystal Le

share


This is a segment from the 0xResearch newsletter. To read full editions, subscribe.


Today marks two years since the eventful day FTX filed for bankruptcy. Sam Bankman-Fried is in jail for 25 years, Ryan Salame likewise for 7.5 years, Caroline Ellison just commenced a two-year jail term and the FTX bankruptcy estate is making progress.

Though the story was widely publicized across mainstream media as a colossal failure of crypto writ large, that was never actually true. The specific areas of failure in the FTX debacle were in fact the kinds of centralized institutions that cryptocurrency was designed to upend. 

Recall the commingling of funds — about $14.6 billion of FTX’s native FTT token — between FTX and its trading arm, Alameda Research. When the value of FTT plummeted, Alameda’s loans that were borrowed against FTT effectively fell underwater.

At the same time, Alameda also held an outstanding loan of 20 million MIM (the stablecoin of Abracadabra protocol) against $5 million FTT.

Source: Abracadabra

Alameda fully paid that debt as FTT cratered on Nov. 9 — two days before FTX filed bankruptcy — to avoid automatic smart contract liquidations. In sum, DeFi worked.

Today, Abracadabra seems to be pretty much dead. Its MIM stablecoin still has a market cap of about $44 million, but hasn’t seen any growth since FTX’s collapse.

Abracadabra’s founder, the infamous Daniele Sesta, has apparently moved on from his once popular “Frog Nation” cult to…memecoins on the Sonic (previously Fantom) chain. The Abracadabra-affiliated project Wonderland, which at one point passed more than $2 billion in TVL, was also stealth-rebranded into a lending protocol, Volta, in late 2023. The move occurred after the project was scandalized with news that its pseudonymous treasury manager turned out to be Michael Patryn, the previously convicted co-founder of the failed Canadian crypto exchange QuadrigaCX.

Today, Abracadabra and Wonderland have turned out to be just another series of ghost projects in the ethereal graveyard of crypto’s history.

When FTX collapsed, there were concerns that Binance would effectively monopolize the centralized crypto exchange market. At that time, its BUSD stablecoin was the third largest, and BNB Chain was also the second biggest L1 by TVL.

Today, Binance retains its position as the largest global cryptocurrency exchange, but fears of a “monopoly” haven’t come to pass.

The BUSD stablecoin was deprecated after the New York Department of Financial Services (NYDFS) ordered its closure in February 2023. Binance then switched to a little known stablecoin, FDUSD, for stablecoin liquidity on its exchange, which has seen growth from $350 million to about $2.3 billion today. 

As for BNB Chain, it’s still fourth by TVL, overtaken only by Solana’s meteoric rise in the past year.

Under FTX Ventures, SBF was also a major investor in dozens of crypto projects. Some of these included LayerZero, Yuga Labs, Near, as well as MoveVM chains like Aptos and Sui — whose mainnets weren’t yet launched — and of course, Solana.

FTX’s large token holdings cast a looming shadow over the future of these projects. Today, most of these projects seem to be doing just fine.

Finally, a post-FTX crypto industry quickly consolidated around the standard of “proof of reserves” as a minimum security standard for centralized crypto product offerings, as seen in newer efforts like Coinbase’s cbBTC or Kraken’s annual audits.

The failure of FTX undoubtedly set the industry back. But two years out, it seems like crypto has at least learned a few lessons.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Brooklyn, NY

SUN - MON, JUN. 22 - 23, 2025

🚀 Build What’s Next — Permissionless IV Hackathon Join us June 22–23 in Brooklyn for the Permissionless IV Hackathon — a 36-hour sprint hosted by Cracked Labs and Blockworks where top builders turn ideas into real products. Come to launch, not just […]

recent research

Research Report Templates (10).png

Research

Kamino has evolved into a full-stack asset scaling suite with V2: unlocking new markets, improving capital efficiency, and catering to various risk profiles. We believe it is best positioned to become the credit backbone of Solana as the ecosystem matures. Simply put, KMNO remains our highest-conviction bet in the Solana ecosystem. This report lays out our thesis.

article-image

Bybit’s Byreal, Binance Alpha and Coinbase’s DEX integrations

article-image

This isn’t the worst hack to ever hit Mt. Gox, but it could be the most entertaining

article-image

Crossover’s CEO discusses institutional interest and how over-the-counter (OTC) trading has picked up in crypto

article-image

Sponsored

This collaboration signifies a major leap forward in expanding the reach and utility of Web3 gaming within the vibrant Asian market

article-image

Asymmetric information is threatening crypto the same way it once threatened equities. Disclosure might be the fix.

article-image

Rate cuts drift into Q4 limbo as markets pretend everything’s fine