How to Spot Defi Ponzi Schemes Before They Drain Your Wallet

The FTX collapse, led by Sam Bankman-Fried, was driven by its overreliance on the FTT token, excessive leverage, and diversion of customer funds. While FTT inflated FTX’s value to $32B, it lacked real backing and was misused as collateral, creating a fragile financial structure. When investor confidence collapsed, insolvency followed, exposing deep flaws in centralized exchanges. The fallout rattled the wider crypto market, echoing previous failures like Terra/Luna, and reignited urgent debates on regulation, transparency, and the future of exchange security.