The FTX Collapse

On November 2, 2022, CoinDesk published a story about Alameda Research's balance sheet that read, on the surface, like a curiosity for forensic accountants. By the time the article was a week old, the second-largest cryptocurrency exchange in the world had filed for bankruptcy and a handful of people who'd done the work in the first 48 hours had made fortunes. This case is the canonical study of how prediction markets process a slow-burning crisis. The early hours were not panic. The information was in the open — the leverage, the related-party exposure, the absurd valuations — but the price moved gradually as the implication compounded. Then Binance walked away from the acquisition, and the chart went vertical. This case teaches what 'information was in the open' actually means: it usually means a few people read the article carefully and most did not.