What a difference a year makes. This time last year, cryptocurrencies were all the rage. Everywhere you turned, celebrities were hawking them — from Kim Kardashian to Spike Lee to Matt Damon. NFTs, a crypto offshoot that assigns blockchain ownership certificates to digital assets, boomed to bizarre heights when cartoon apes sold for millions. And being a real estate agent for virtual land became an actual career. Meanwhile the oldest and most popular cryptocurrency, Bitcoin, crested on its ever-wild ride of price valuation, peaking at $64,000 last November.

Today, Bitcoin’s value is plummeting back to earth, currently at about $16,000, depending on the day (or hour). NFT trading has all but collapsed. And various celebrities are under investigation for promoting the now bankrupt FTX crypto exchange in a class action lawsuit. The last few months have witnessed a series of dramas in the crypto universe, bringing down major players — including Terra, a “stable coin”; Celsius, a crypto-lending firm; and Three Arrows Capital, a crypto hedge fund. Now FTX, previously the third-largest cryptocurrency exchange, has collapsed at a dizzying speed — and along with it the finances and reputation of crypto’s golden boy, Sam Bankman-Fried, aka SBF.

In a few short days in early November, FTX went from a $32 billion–valued company with investments from the likes of BlackRock and Sequoia to bankruptcy. And SBF has gone from hobnobbing with Bill Clinton and Gisele Bündchen to “a fallen wreckage,” in his own words.

On November 2, a report from CoinDesk found that FTX had used its own exchange-generated tokens (FTTs), a kind of internal currency printed by FTX itself to be used on its market, to inflate its balance sheet and that of its affiliated trading firm, Alameda Research. The revelations also pointed to the likely scenario that Bankman-Fried had used billions of dollars’ worth of FTX customer assets to fund Alameda’s financial bets through a “backdoor” accounting mechanism that funneled billions in FTX funds to Alameda without alerting auditors or triggering accounting red flags.

Four days after CoinDesk’s report, Changpeng Zhao, the CEO of Binance, the biggest crypto exchange (and itself under investigation by the US Justice Department for money laundering and sanctions violations) announced that he would sell his stock of FTT tokens. The crypto equivalent of a bank run ensued, with over $6 billion worth of funds withdrawn in seventy-two hours. Zhao then offered to buy FTX on November 8, but by the next day pulled out of the deal, tweeting: “Sad day. Tried, but” with a crying face emoji.

Sad day. Tried, but 😭

— CZ 🔶 Binance (@cz_binance) November 9, 2022

By November 11, FTX filed for bankruptcy, leaving behind an $8 billion hole in its customers’ accounts. To add to the drama, soon after bankruptcy, a hacker transferred hundreds of millions of dollars out of the company.

As part of bankruptcy proceedings, John Ray III was brought in as FTX’s new CEO. Ray is an insolvency lawyer whose claim to fame includes winding down Enron in 2001. He said in the bankruptcy filing: “Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.” Ray’s experience is certainly relevant, as FTX’s operations — fictional valuations and accounting manipulations were used to artificially pump up balance sheets — have clear parallels to Enron’s. By now the chaotic details of FTX’s “balance sheets” and its toxic corporate culture are on full display — described by media outlets as one part feudal court, one part gang of kids running wild in the Bahamas.

But you don’t have to have a long memory to remember the press, politicians, and celebrities fawning over SBF. Way back in… July, for instance, the Economist ran an article called, “Crypto’s last man standing,” and pondered, “Is Sam Bankman-Fried the John Pierpont Morgan of crypto?” The comparison to JP Morgan, they concluded, “is surprisingly instructive.” Others compared SBF to billionaire investor Warren Buffett, and as far back as two months ago praised FTX for emerging as an industry backstop during widespread fallout in the industry. SBF’s crypto empire was widely considered to be the most legit corner of crypto finance.

Thirty years old and charmingly or annoyingly disheveled, depending on your perspective, Sam Bankman-Fried was crypto’s wonder boy, a liberal darling, and incidentally the second-largest donor to the Democratic Party on top of being a major funder of the trendy philosophical fad “effective altruism.” This summer he was to be found at FTX’s conference in the Bahamas, sitting on a panel in his shorts and a T-shirt alongside Bill Clinton and Tony Blair. The impact of SBF’s cosmic failure goes beyond the shock it delivers to his erstwhile liberal fans and beyond the financial fallout it forces onto the broader crypto landscape. It gets to the credibility of the blockchain project itself.

Is crypto on its way out? It’s too soon to tell. But whether the industry manages to limp along until the next speculative bubble reinjects life into it, or whether it crawls back into the fringes of finance, remember this moment when crypto’s absurd claims about revolutionizing finance and the world were exposed as little more than a scam.