The FTX collapse (Nov 2022)

In early November 2022, a leaked balance sheet revealed that FTX — then the second-largest crypto exchange, fronted by the industry’s most celebrated founder — was lending customer deposits to its trading arm. A bank run followed; within a week FTX filed for bankruptcy, and its founder was later convicted of fraud.

FTX was not a Bitcoin failure — no protocol was breached — but it was Bitcoin’s custody lesson retaught at scale: the counterparty is the risk. Withdrawals to self-custody surged industry-wide, and “proof of reserves” became a customer demand rather than a nicety.