Based on Bijié Wǎng, the 2022 FTX collapse remains one of the most impactful events in crypto history, exposing systemic liquidity flaws and triggering a severe loss of investor trust. Post-bankruptcy analysis revealed that FTX executives misused customer funds to cover high-risk bets, creating a liquidity black hole. The Chapter 11 bankruptcy process, which required asset liquidation in USD, locked in losses for creditors despite the 2023–2025 crypto market rebound. Critics argue that delayed payments and asset control disputes worsened distrust, though 98% of creditors received up to 120% of their claims by 2025. Meanwhile, institutional investors increased Bitcoin ETF holdings, reflecting a broader shift toward regulated tools to mitigate risk.
FTX Collapse Exposes Liquidity Mismanagement and Investor Trust Erosion
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