When crypto exchange FTX collapsed, Samuel Bankman-Fried's multibillion-dollar fortune was wiped out. AFP
When crypto exchange FTX collapsed, Samuel Bankman-Fried's multibillion-dollar fortune was wiped out. AFP
When crypto exchange FTX collapsed, Samuel Bankman-Fried's multibillion-dollar fortune was wiped out. AFP
When crypto exchange FTX collapsed, Samuel Bankman-Fried's multibillion-dollar fortune was wiped out. AFP

FTX crypto collapse: 12 lessons for investors to learn


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The explosive collapse of crypto exchange FTX has sent shock waves throughout the industry and cost up to a million investors an awful lot of money.

Even if you wouldn’t touch Bitcoin, Ethereum, Dogecoin and all the other alt-coins, you can still learn from them.

Here are 12 investor lessons worth learning after the latest crypto meltdown, which you can apply to your own portfolio.

What is Bitcoin and how did it start?

1. Beware false prophets

Sam Bankman-Fried, the self-styled eccentric genius behind FTX, is a shaggy-haired 30-year-old in shorts and untied trainers, who famously played League of Legends while on business phone calls.

It’s no surprise that crypto fans loved the “unkempt millennial”, as The Wall Street Journal called him, but grown-up investors who should have known better also bought into the “SBF” cult — and paid a high price.

Mr Bankman-Fried has gone from “billionaire prodigal son to bankrupt pariah in record time”, says Matt Weller, global head of research at Forex.com and City Index. “The implosion of FTX has set the crypto industry back tremendously.”

2. Everybody is wise after the event

Just as investors rushed to praise SBF before the crash, now they are rushing to bury him. This is yet another warning of the dangers in following the crowd.

Stick to what you understand. Billionaire investor Warren Buffett is widely quoted, but judging by recent events, widely ignored.

The “Sage of Omaha” famously said: “Invest in what you know … and nothing more.”

Unfortunately, that lesson was lost on the venture capitalists who poured money into FTX, having fallen for the SBF myth.

Huge financial institutions such as BlackRock, the world’s biggest fund manager, also fell for the hype, Mr Weller says.

3. Ignore celebrities

You wouldn't take fashion tips from a crypto investor, so why take investment tips from a celebrity?

Yet, that's exactly what people did with FTX, which was endorsed by A-list celebrities such as NFL quarterback Tom Brady, his ex-wife, model Gisele Bundchen, basketball player Shaquille O’Neal and Seinfield writer Larry David. All skilled in their chosen field, but that wasn’t finance.

Model Gisele Bundchen endorsed Sam Bankman-Fried's collapsed crypto exchange FTX. Photo: Baz Luhrmann / Chanel
Model Gisele Bundchen endorsed Sam Bankman-Fried's collapsed crypto exchange FTX. Photo: Baz Luhrmann / Chanel

They are now being sued for $11 billion in a class-action lawsuit brought by disgruntled investors. With luck, that will make other celebrities think twice about handing out investment advice.

4. Cheap money blows bubbles

Central bank largesse blew bubbles into everything, from equities to bonds, property, art, sports cars, thoroughbred racehorses and cryptocurrencies, says Russ Mould, investment director at online platform AJ Bell.

“It stands to reason that the withdrawal of that cheap cash will pop the selfsame bubbles,” he says.

We live in a different world today as central bankers tighten monetary policies and investors can no longer afford to take the same level of risk.

5. A crash can last longer than people think

Self-styled contrarian investors may be tempted to go shopping for crypto at today's reduced prices, but they should tread carefully as contagion grows, says Carsten Menke, head of next generation research at Julius Baer.

“Genesis Global Capital, another crypto lending platform, also suspended withdrawals, citing ‘unprecedented market turmoil’ after already being affected by the collapse of Three Arrows Capital in June,” Mr Menke says.

This year has also seen the downfall of Luna, broker Voyager and crypto lender Celsius Network.

“Amid mounting contagion and shattered confidence, any kind of recovery becomes much less likely,” says Mr Menke.

“The wounds of this crypto crisis will need much more time to heal and the long-term potential of digital assets has firmly moved out of focus.”

6. Trust matters

Trust may sound like an old-fashioned concept but we are lost without it.

FTX was a household name among retail traders in the often-opaque crypto markets, Mr Weller says.

“Likewise, institutions trusted the exchange as a trustworthy, ethical counterparty in the space. Even US lawmakers had a positive view of SBF from his aggressive lobbying efforts and willingness to explain the nuances of the crypto industry.”

All of this trust has been destroyed, leaving behind massive financial losses and extreme cynicism towards crypto markets.

“If even SBF and FTX were running illegal undercollateralised businesses, who can be trusted?” Mr Weller says.

It will take months if not years for the trauma to heal, he says.

7. Beware people who claim to do good

Mr Bankman-Fried followed a creed called “Effective Altruism”, whose adherents pledge to give away as much of their wealth as they can.

Today, many believe his high-minded claims helped to deflect criticism and scrutiny from how he was making that money in the first place.

If even SBF and FTX were running illegal undercollateralised businesses, who can be trusted?
Matt Weller,
global head of research at Forex.com and City Index

8. Don't borrow to invest

Investing money you don't have, known as leveraging, can be a respectable strategy in the right hands but it is always risky.

This is particularly so in the case of FTX, which created its own cryptocurrency, FTT, then used it as collateral to raise loans.

Yet FTT had no actual value, aside from a promise by FTX to buy any tokens for $22.

Leveraging is more dangerous than ever as central bankers tighten monetary policies, says Jim Wood-Smith, market commentator at Hawksmoor Investment Management.

“Money has become more expensive and harder to come by and that makes things very tricky for those who need to borrow to stay solvent.”

It is especially dangerous when your collateral is valueless, Mr Wood-Smith adds.

9. There is a point to regulation

If you buy an unregulated asset like crypto, you are on your own if something goes wrong, says Jack Amy, portfolio analyst at digital wealth manager Moneyfarm.

“FTX clients can’t withdraw their funds from the exchange. In a world with no regulator, it will be difficult to get any recourse on cryptocurrency losses.”

At least if you buy a regulated investment and feel cheated, you have some hope of redress.

Cryptocurrencies — in pictures

10. Speculating and investing are two different things

Mr Wood-Smith says his portfolios “have never, do not and will not hold” crypto.

“They are not, in any shape or form, investments but sheer speculation.”

As with any speculative venture, do not invest money unless you can afford to lose all of it.

11. There will be another bubble soon enough

There is nothing new about crypto, Mr Wood-Smith says.

“Homo sapiens have rarely been able to resist the lure of speculation. We are deterred by neither history nor experience.”

Tulip bulbs, the South Sea Bubble, dot-com shares, Bernie Madoff and Beanie Babies have all gone the same way, he says — and there will be more.

All have one thing in common: when there is big money to be made, investors lose their heads. Then their shirts.

12. History suggests there will be more bubbles, so how do you spot one?

All bubbles have similarities, says Mr Mould.

“The starting point for a bubble is a new investment opportunity, one that may be genuine, or even one with just a big enough grain of truth to be irresistible to those looking for a quick financial killing.

“It could be anything from railways to cryptocurrencies and the more disruptive or revolutionary it seems, the better.”

That may help you to identify the next one - but it may prove difficult to resist.

yallacompare profile

Date of launch: 2014

Founder: Jon Richards, founder and chief executive; Samer Chebab, co-founder and chief operating officer, and Jonathan Rawlings, co-founder and chief financial officer

Based: Media City, Dubai 

Sector: Financial services

Size: 120 employees

Investors: 2014: $500,000 in a seed round led by Mulverhill Associates; 2015: $3m in Series A funding led by STC Ventures (managed by Iris Capital), Wamda and Dubai Silicon Oasis Authority; 2019: $8m in Series B funding with the same investors as Series A along with Precinct Partners, Saned and Argo Ventures (the VC arm of multinational insurer Argo Group)

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Publisher: Konami

Platforms: PlayStation 5, Xbox Series X/S, PC

Rating: 4.5/5

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Three trading apps to try

Sharad Nair recommends three investment apps for UAE residents:

  • For beginners or people who want to start investing with limited capital, Mr Nair suggests eToro. “The low fees and low minimum balance requirements make the platform more accessible,” he says. “The user interface is straightforward to understand and operate, while its social element may help ease beginners into the idea of investing money by looking to a virtual community.”
  • If you’re an experienced investor, and have $10,000 or more to invest, consider Saxo Bank. “Saxo Bank offers a more comprehensive trading platform with advanced features and insight for more experienced users. It offers a more personalised approach to opening and operating an account on their platform,” he says.
  • Finally, StashAway could work for those who want a hands-off approach to their investing. “It removes one of the biggest challenges for novice traders: picking the securities in their portfolio,” Mr Nair says. “A goal-based approach or view towards investing can help motivate residents who may usually shy away from investment platforms.”
Polarised public

31% in UK say BBC is biased to left-wing views

19% in UK say BBC is biased to right-wing views

19% in UK say BBC is not biased at all

Source: YouGov

Classification of skills

A worker is categorised as skilled by the MOHRE based on nine levels given in the International Standard Classification of Occupations (ISCO) issued by the International Labour Organisation. 

A skilled worker would be someone at a professional level (levels 1 – 5) which includes managers, professionals, technicians and associate professionals, clerical support workers, and service and sales workers.

The worker must also have an attested educational certificate higher than secondary or an equivalent certification, and earn a monthly salary of at least Dh4,000. 

How Alia's experiment will help humans get to Mars

Alia’s winning experiment examined how genes might change under the stresses caused by being in space, such as cosmic radiation and microgravity.

Her samples were placed in a machine on board the International Space Station. called a miniPCR thermal cycler, which can copy DNA multiple times.

After the samples were examined on return to Earth, scientists were able to successfully detect changes caused by being in space in the way DNA transmits instructions through proteins and other molecules in living organisms.

Although Alia’s samples were taken from nematode worms, the results have much bigger long term applications, especially for human space flight and long term missions, such as to Mars.

It also means that the first DNA experiments using human genomes can now be carried out on the ISS.

 

Defence review at a glance

• Increase defence spending to 2.5% of GDP by 2027 but given “turbulent times it may be necessary to go faster”

• Prioritise a shift towards working with AI and autonomous systems

• Invest in the resilience of military space systems.

• Number of active reserves should be increased by 20%

• More F-35 fighter jets required in the next decade

• New “hybrid Navy” with AUKUS submarines and autonomous vessels

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Who are the Soroptimists?

The first Soroptimists club was founded in Oakland, California in 1921. The name comes from the Latin word soror which means sister, combined with optima, meaning the best.

The organisation said its name is best interpreted as ‘the best for women’.

Since then the group has grown exponentially around the world and is officially affiliated with the United Nations. The organisation also counts Queen Mathilde of Belgium among its ranks.

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THE SPECS

2020 Toyota Corolla Hybrid LE

Engine: 1.8 litre combined with 16-volt electric motors

Transmission: Automatic with manual shifting mode

Power: 121hp

Torque: 142Nm

Price: Dh95,900

Moon Music

Artist: Coldplay

Label: Parlophone/Atlantic

Number of tracks: 10

Rating: 3/5

Desert Warrior

Starring: Anthony Mackie, Aiysha Hart, Ben Kingsley

Director: Rupert Wyatt

Rating: 3/5

What vitamins do we know are beneficial for living in the UAE

Vitamin D: Highly relevant in the UAE due to limited sun exposure; supports bone health, immunity and mood.Vitamin B12: Important for nerve health and energy production, especially for vegetarians, vegans and individuals with absorption issues.Iron: Useful only when deficiency or anaemia is confirmed; helps reduce fatigue and support immunity.Omega-3 (EPA/DHA): Supports heart health and reduces inflammation, especially for those who consume little fish.

Dhadak 2

Director: Shazia Iqbal

Starring: Siddhant Chaturvedi, Triptii Dimri 

Rating: 1/5

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Our legal columnist

Name: Yousef Al Bahar

Advocate at Al Bahar & Associate Advocates and Legal Consultants, established in 1994

Education: Mr Al Bahar was born in 1979 and graduated in 2008 from the Judicial Institute. He took after his father, who was one of the first Emirati lawyers

Company info

Company name: Entrupy 

Co-founders: Vidyuth Srinivasan, co-founder/chief executive, Ashlesh Sharma, co-founder/chief technology officer, Lakshmi Subramanian, co-founder/chief scientist

Based: New York, New York

Sector/About: Entrupy is a hardware-enabled SaaS company whose mission is to protect businesses, borders and consumers from transactions involving counterfeit goods.  

Initial investment/Investors: Entrupy secured a $2.6m Series A funding round in 2017. The round was led by Tokyo-based Digital Garage and Daiwa Securities Group's jointly established venture arm, DG Lab Fund I Investment Limited Partnership, along with Zach Coelius. 

Total customers: Entrupy’s customers include hundreds of secondary resellers, marketplaces and other retail organisations around the world. They are also testing with shipping companies as well as customs agencies to stop fake items from reaching the market in the first place. 

Lexus LX700h specs

Engine: 3.4-litre twin-turbo V6 plus supplementary electric motor

Power: 464hp at 5,200rpm

Torque: 790Nm from 2,000-3,600rpm

Transmission: 10-speed auto

Fuel consumption: 11.7L/100km

On sale: Now

Price: From Dh590,000

Where to apply

Applicants should send their completed applications - CV, covering letter, sample(s) of your work, letter of recommendation - to Nick March, Assistant Editor in Chief at The National and UAE programme administrator for the Rosalynn Carter Fellowships for Mental Health Journalism, by 5pm on April 30, 2020

Please send applications to nmarch@thenational.ae and please mark the subject line as “Rosalynn Carter Fellowship for Mental Health Journalism (UAE programme application)”.

The local advisory board will consider all applications and will interview a short list of candidates in Abu Dhabi in June 2020. Successful candidates will be informed before July 30, 2020. 

German intelligence warnings
  • 2002: "Hezbollah supporters feared becoming a target of security services because of the effects of [9/11] ... discussions on Hezbollah policy moved from mosques into smaller circles in private homes." Supporters in Germany: 800
  • 2013: "Financial and logistical support from Germany for Hezbollah in Lebanon supports the armed struggle against Israel ... Hezbollah supporters in Germany hold back from actions that would gain publicity." Supporters in Germany: 950
  • 2023: "It must be reckoned with that Hezbollah will continue to plan terrorist actions outside the Middle East against Israel or Israeli interests." Supporters in Germany: 1,250 

Source: Federal Office for the Protection of the Constitution

Our legal consultant

Name: Dr Hassan Mohsen Elhais

Position: legal consultant with Al Rowaad Advocates and Legal Consultants.

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Jeff Buckley: From Hallelujah To The Last Goodbye
By Dave Lory with Jim Irvin

Sam Smith

Where: du Arena, Abu Dhabi

When: Saturday November 24

Rating: 4/5

Trump v Khan

2016: Feud begins after Khan criticised Trump’s proposed Muslim travel ban to US

2017: Trump criticises Khan’s ‘no reason to be alarmed’ response to London Bridge terror attacks

2019: Trump calls Khan a “stone cold loser” before first state visit

2019: Trump tweets about “Khan’s Londonistan”, calling him “a national disgrace”

2022:  Khan’s office attributes rise in Islamophobic abuse against the major to hostility stoked during Trump’s presidency

July 2025 During a golfing trip to Scotland, Trump calls Khan “a nasty person”

Sept 2025 Trump blames Khan for London’s “stabbings and the dirt and the filth”.

Dec 2025 Trump suggests migrants got Khan elected, calls him a “horrible, vicious, disgusting mayor”

COMPANY PROFILE
Name: Airev
Started: September 2023
Founder: Muhammad Khalid
Based: Abu Dhabi
Sector: Generative AI
Initial investment: Undisclosed
Investment stage: Series A
Investors: Core42
Current number of staff: 47
 
Updated: March 13, 2024, 10:01 AM