Back to collectionThe night of trust collapse
Only a day later, the rescue deal fell apart. After preliminary due diligence, the major global exchange abandoned the acquisition, saying the problems were beyond its control or ability to help, leaving the distressed exchange alone in the spotlight. The figures that emerged next suffocated the industry: the shortfall in customer funds was on the order of $8 billion. Users' money had not remained on the exchange; it had flowed to an affiliated trading firm. Withdrawals went silent, and millions of users' assets became bankruptcy claims overnight.
Only a day later, the rescue deal fell apart. After preliminary due diligence, the major global exchange abandoned the acquisition, saying the problems were beyond its control or ability to help, leaving the distressed exchange alone in the spotlight. The figures that emerged next suffocated the industry: the shortfall in customer funds was on the order of $8 billion. Users' money had not remained on the exchange; it had flowed to an affiliated trading firm. Withdrawals went silent, and millions of users' assets became bankruptcy claims overnight.
The market voted in the most direct way possible: BTC fell below 16,000 overnight to a two-year low; altcoins flash-crashed across the board; the fear index was pinned at “extreme fear.” This was not a mechanism failure like Luna, but a failure of trust itself—the industry's second-largest exchange, viewed by countless institutions as the most compliant and dependable, had ground the very idea of custody into the dust.
It was a particularly dark night for the blockchain game track. The FTX system has been one of the most active investors and market-making ecosystems in blockchain game in the past two years. The treasury of many studios and the market stocks of many projects were staked in it, and they were cleared overnight. A colleague posted in the group: "Our game does not die because of the product, but because of the exchange."
The lights in the studio's conference room burned past midnight. Finance reviewed its exchange exposure three times and reached a clean conclusion: not a cent was held there. The relief did not truly lighten anyone. At the all-hands meeting, management did not sugarcoat it: “We still have runway, but every dollar must do the work of two.” Asked whether the game would still be made, the answer was yes—and more aggressively than ever. With the industry in such disrepair, people doing serious work had no competition.
In the community, the night watchman put the self-hosting tutorial at the top of the list, and it was retweeted thousands of times overnight.
Author's note: Luna's failure is the algorithm, FTX's failure is the people's hearts. Algorithms can be rewritten, and the rebuilding of human hearts takes years.