FTX, an internal token of the cryptocurrency exchange platform, was being traded back and forth to up its value to increase net worth. Founder and CEO of Binance, CZ, discovered the scheme and dumped FTT tokens on the market, causing liquidity for FTX to crash. The scheme turned out to be a large Ponzi scheme all along.

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FTT Token Ponzi Scheme: What Happened

Introduction

For those who may not know, FTT was the internal token of FTX, a cryptocurrency derivatives exchange. Investors thought that FTT was being used as their net worth, but what they didn’t know was that their liquidity was also tied to it.

The Trading Scandal

What really happened was that FTX users were just trading FTT tokens back and forth. This was known as “wash trading,” which artificially inflated the value of the token. As a result, the net worth of the investors was higher than what it actually should have been.

Binance Comes Into the Picture

CZ, the founder and CEO of Binance, got wind of this scandal and decided to take matters into his own hands. To bring light to the situation, he dumped FTT tokens on the market, causing its liquidity to crash.

The Aftermath

After the dust had settled, it became apparent that FTX had been running a Ponzi scheme all along. The entire FTT token was just an elaborate scheme to make the investors’ net worth and the exchange’s liquidity seem higher than it actually was.

Conclusion

The FTT token scandal is a significant reminder to investors to always perform due diligence before investing in any cryptocurrency. It is essential to understand the market dynamics of a particular token, and when something seems too good to be true, it usually is.

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