In what is now being called one of the biggest mess-ups in financial history, the FTX scandal has seemed to overtake Enron as an even bigger mess. Though, being compared to Enron like that, the question becomes what exactly makes them so similar?
To begin, let’s quickly go over what the FTX scandal is. FTX, a digital currency exchange company, was founded and began operations in 2019 by Sam Bankman-Fried. The company rose quickly and rapidly gained high-dollar investors and celebrity endorsements. Though as bitcoin and crypto, in general, seemed to fall in 2021 FTX remained stable leading many to think FTX could be the leader in the field. However, earlier this month new evidence was brought to the surface that could explain how FTX was able to keep its numbers high when everyone else was going lower. A crypto investing firm, Alameda Research, which was also owned by Bankman-Fried, published its balance sheet which showed that things didn’t add up. At this point, a mad dash began for companies and individuals alike to withdraw all of their money from the platform in worries they would lose their money if they didn’t. Though, as money was taken from FTX Bankman-Fried put a stop to it and quit allowing people to withdraw. Only for the company to later file for bankruptcy, citing poor mismanagement and financial opacity.