A cryptocurrency is a form of currency that is online and not backed by any government. Its value fluctuates and is dependent on more people buying it to increase its value. Not being backed by any government makes it very unstable which may lead to great price swings, both up and down. 

FTX is a cryptocurrency company that was founded by Sam Bankman-Fried in 2019. Sam Bankman-Fried was 27 at the time and had graduated from MIT five years prior. His company FTX, one of the biggest crypto platforms, recently filed for bankruptcy on November 11, 2022. Bankman-Fried is accused of “stealing” billions from his customers’ deposits at FTX. Bankman-Fried transferred billions of dollars to his side company, Alameda Research.  He kept these transfers a secret.  Alameda Research would use this money for risky trades, loans, and investments. In these investments, he could either gain billions or lose all of his money. He has allegedly squandered these billions on bad investments, lavish real estate, and political contributions. Although Bankman-Fried has pleaded guilty to wire fraud, he has been accused of more such as money laundering to which he has pleaded not guilty. Depositors who had their money at FTX’s exchange lost most, if not all, of their money and may never receive any of it back. This has caused many crypto investors at other exchanges to withdraw their crypto investments, too. 

One company that was hit hard by the FTX fallout was Silvergate Bank, a California bank that provided services to crypto-currency users. One specific service was a cryptocurrency exchange allowing users to trade dollars for various cryptocurrencies and vice versa. A month after the news about FTX became public, Silvergate shares went down 43% and their stock had fallen 84% from November 2022 to January 2023. Silvergate had billions of dollars of withdrawals, a classic “run on the bank”, and Silvergate is now closed after ten years of being in the crypto market business. This all happened in a matter of months. Silvergate is not the only company this has happened to. It is just the most notable one. The FTX scandal has made people second guess their prior decision of investing their money in a “crypto bank.”  Some people thought they were going to come out of this wealth, but instead, they lost all of their money. Now everyone is uneasy about this newer form of currency, and will it ever reach the same popularity again despite one company giving it a bad reputation?  Only time will tell.