FTX Collapses and ChatGPT Launches in the Same Month
· Jerwin Arnado
Archive note: this is a backdated post, written years later while rebuilding this site. It’s dated to the moment it covers, but the hindsight is real.
Some months are just months. November 2022 was a hinge.
On November 11, FTX — the second-largest crypto exchange, the Super Bowl ads, the stadium name, the founder profiled as finance’s boy genius — filed for bankruptcy with a reported $8 billion hole where customer deposits should have been. On November 30, OpenAI quietly released a chat interface to its language models called ChatGPT, and within days my feeds, group chats, and profession stopped talking about anything else.
One era ended and another started, nineteen days apart. I want to write both down while the whiplash is fresh.
The FTX part: the boring crime
After Terra in May I wrote that the failure was a mechanism working as designed. FTX is the opposite and somehow worse: no exotic algorithm, no death spiral — by every report, just customer deposits funneled to a sister trading firm, Alameda, against a balance sheet made of the exchange’s own self-issued token. When a leaked balance sheet triggered a run (and a rival’s pointed tweet pulled the thread), there was nothing underneath. The oldest crime in finance, wearing a hoodie.
The detail that should sting every one of us in tech: the diligence failures weren’t retail FOMO this time. Blue-chip venture firms wired nine figures into a company that, per the new CEO’s bankruptcy filing, lacked basic corporate controls — and he’s the man who cleaned up Enron. “Smart money” is a marketing term. The index card from May needs one addendum: audited, boring, regulated custody is a feature, not a failure of imagination.
The ChatGPT part: the talking machine
Meanwhile: I have spent the week pasting code into a chat box and receiving explanations, refactors, test cases, and — when I asked it to — a regex with a justification. It is confidently wrong often enough that I’ve started fact-checking it like a clever colleague who never says “I don’t know.” And it is useful anyway. That combination is going to take real judgment to handle, and most people won’t bring any.
I flagged in the DALL·E post that text was the obvious next target after images. What I didn’t anticipate is the interface being the breakthrough. The underlying model class isn’t new — what’s new is that talking to it requires no API key, no prompt engineering folklore, no ML background. They made the capability conversational, and five days in, reportedly a million people have tried it. My non-tech relatives are sending me screenshots. That never happened with GPT-3.
Holding both at once
The temptation is a tidy narrative — “crypto was fake, AI is real” — and I half-believe it. But I’ve written enough of these posts to recognize launch-week euphoria; it felt like this in the Axie summer too. So instead, the falsifiable version, banked for future me:
- The FTX collapse is terminal for an era, not for the technology — but the burden of proof has permanently moved. Crypto now has to demonstrate use that survives without a bull market narrating it. (The Merge stays on the credit side of that ledger.)
- ChatGPT is not a fad, because unlike every hype cycle above, it did something for me, personally, on a Tuesday, that saved an hour of real work. Utility-per-week is my metric now. Speculative assets never had any.
- Prediction, stated plainly: within a year, some form of this is in my daily toolchain, and the interesting questions will be about trust, verification, and what happens to the junior-developer pipeline. Check back.
Strange month. The casino burned down and the library learned to talk.