Lessons Learned from the Crypto Craze and FTX Fallout

Posted by Dana Funds Investment Team on Dec 1, 2022 5:01:49 PM

“Only when the tide goes out do you discover who's been swimming naked.” –Warren Buffett

It often takes a black-swan event to uncover which market participants were taking excessive risk with their investment dollars. The sudden unwinding of FTX, the now infamous cryptocurrency exchange, resulted in massive losses for even the most sophisticated investors. Venture capital firms, private equity groups, high-profile celebrities, and so much retail money all trusted FTX and its founder and former CEO Sam Bankman-Fried (also known as SBF).

The collapse has shades of Long-Term Capital Management (LTCM), Enron, Lehman Brothers, and Bernie Madoff all rolled into one scandal. From highly-leveraged financial market wagers to astounding hubris to non-diversified holdings to outright fraud and theft, there are lessons we all can learn from FTX’s fall from (perceived) grace.

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The Dana Funds are distributed by Ultimus Fund Distributors, LLC. There is no affiliation between Ultimus Fund Distributors, LLC. and the firms referenced in this blog post.