In 2022, the entire crypto industry experienced its darkest chapter — FTX, once a industry star valued at $32 billion, turned into the world's largest Ponzi scheme in just a few weeks. The funds of 500,000 users were wiped out, and top-tier investment firms like Sequoia Capital, SoftBank, and Temasek all suffered losses, collectively losing billions of dollars.

The protagonist of the story is Sam Bankman-Fried (SBF), a genius founder born in the 90s. This guy is a master of propaganda — Super Bowl ads, celebrity endorsements, academic publications, political donations — a full set of capital operations that he used to package himself as the "Warren Buffett of the crypto world." In just three years, FTX became one of the largest crypto exchanges by trading volume globally. No one saw the snake behind the scenes.

The scam's structure is actually simple — just two words: "self-circulation." FTX issued its own platform token, FTT, then what? It moved users' real money to a related company, Alameda. Then it used these FTT tokens as core assets to raise funds — a complete house of cards with no real assets backing it. Simply put, it was a game of passing assets from hand to hand, spinning in circles, and as long as no one exposed the hole, the game could continue.

Until November 2022, when the truth was finally exposed. Media uncovered Alameda's balance sheet, revealing that this related company was actually heavily in the red. Once the news broke, panic spread instantly. A major exchange announced it would liquidate its $580 million worth of FTT, causing a real explosion. Within 48 hours, FTX users withdrew over $6 billion, and liquidity was completely drained.

The price of FTT plummeted from $22 to below $3, a drop of over 90%. SBF's personal wealth evaporated by 105.7 billion yuan in a single day — going from billionaire to pauper. The most ironic part was that he still posted explanations on Twitter, only to be arrested the next day.

Later, FTX filed for bankruptcy, with a funding gap exceeding $8 billion. Sequoia Capital's $213 million investment was wiped out, Temasek's $275 million was lost, and old institutions like SoftBank and Tiger Global could only accept defeat. Investigations revealed that SBF used misappropriated funds to buy luxury homes, make political donations, and indulge in an extravagant lifestyle — truly living a life of excess.

Ultimately, SBF was sentenced to 25 years in prison for fraud, and assets worth over $11 billion were confiscated. This incident served as a lesson to the entire crypto industry: over-packaging, regulatory vacuum, information asymmetry — when these elements combine, they can cause enormous damage. To this day, this scam remains a scar on the credibility crisis of the crypto market.