Market history · Digital assets ·
Terra and FTX: crypto's year of collapses
In May 2022 the Terra ecosystem collapsed after its algorithmic stablecoin lost its dollar peg, erasing tens of billions of dollars of value. On 11 November the exchange FTX filed for bankruptcy after it emerged that customer funds had been used to support an affiliated trading firm.
Both failures highlighted risks that had little to do with the price of bitcoin: opaque balance sheets, conflicts of interest, and custody arrangements.
The takeaway
Counterparty and custody risk can dominate market risk when oversight is thin.
This is a retrospective about a past event, provided for general information. It is not investment advice, does not describe RockLake's positioning at the time, and past performance is not a guide to future performance. Read the risk warning.