FTX was a crypto exchange where customers can trade digital currencies using traditional money. It made a lot of noise for being the fastest-growing platform of its kind, reaching the #3 spot in less than two years. While it caught some off guard, almost everyone else with a keyboard and a Twitter handle claimed to have predicted the FTX collapse ages ago. It’s just unlucky these financial oracles were too shy to warn the 1.2 million people who got scammed by Sam Bankman-Fried and his clique.
The Ponzi Scheme (1920)
Charles Ponzi born Carlo Pietro Giovanni Guglielmo Tebaldo Ponzi (March 3, 1882 – January 15, 1949) was an Italian swindler and con artist who operated in the U.S. and Canada. In 1920, Ponzi discovered arbitrage in the form of international postal reply coupons. Coupons purchased in Spain at a pre-set exchange rate could be redeemed for a nickel back in the U.S. He promised clients a 50% profit within 45 days or 100% profit within 90 days, by buying discounted postal reply coupons in other countries and redeeming them at face value in the U.S. In reality, Ponzi was paying earlier investors using the investments of later investors. While this type of fraudulent investment scheme was not invented by Ponzi, it became so identified with him that it now is referred to as a "Ponzi scheme". His scheme ran for over a year before it collapsed, costing his "investors" $20 million.