Read the lesson in English  
then translate to your own language to verify your understanding.

Collapse of the FTX Crypto Exchange | English Lesson

Nov 18, 2022

Welcome to English for Economists, the podcast meant for people working in economics who want to improve their English using real-world, contemporary examples. In this English lesson, we will look at some vocabulary surrounding the recent collapse of FTX, a large crypto-exchange firm.  

Look at this headline, published by the New York Times on November 17th.

Investor Losses From FTX’s Implosion Are Growing

As I mentioned in the introduction, FTX is a crypto exchange. What is a ‘crypto exchange’, you might ask? That question has a complicated answer, but in the simplest form,  a crypto exchange is where you go to buy and trade digital assets. It is also the place you can cash out of your investment into hard currency. This particular exchange –– the FTX exchange –– is a new company. It was founded in 2019, and at its peak in 2021, it had over one million users. It was the third-largest crypto exchange by volume. So, FTX was a big player, and it has some big investors.

Those good old days are over now.

Listen to the headline again: Investor Losses From FTX’s Implosion Are Growing

So first, what is an ‘implosion’? Well, an implosion is when something collapses inward. There is a kind of contraction.  And as this headline says, FTX has ‘imploded’.

Implosion is the opposite of ‘explosion’.  You could say that this company first had explosive growth as it increased in the size of its customer base and its volume of transactions. Then, they began to have serious problems which led to a collapse, the implosion. Explosion / Implosion.

FTX imploded. Its value decreased, and fast!

The implosion resulted in the company going bust. FTX declared bankruptcy on November 11th after investors suddenly lost faith leading to a withdrawal of funds and support. There was a ‘run’ on FTX’. Investors began to withdraw their cash from the company after media reports provided evidence that the sister company Alameda Research was using customer funds to make risky investments.  

One of the immediate results of this implosion was that FTX’s own cryptocurrency plummeted. The cryptocurrency, called the FTX token, has fallen from a recent high of nearly $20 to a low of close to $1.50 as of today.

Okay. I just used the word cryptocurrency. So on that point, I want to digress for one moment, and by ‘digress’ I mean this: let me shift to a different, but related point in the conversation. When you say ‘let me digress’, you signal to your listeners that you are going to talk about something else, but something relevant.

So let me ‘digress‘ for a moment and say this:

In this crypto world, many people refer to crypto assets like bitcoin as ‘currencies’. Experts dispute the use of the word currency used when talking about anything crypto-related. They point out that, the core meaning of currency is a system of money that has three basic features, or in other words, it meets three basic requirements: A currency has to be a unit of account, it has to be a store of value,  and it needs to serve as a medium of exchange.

With the collapse –– or the implosion –– of FTX, investors have been taught once again that cryptocurrencies fail miserably in their role as a store of value.

Well, let’s get back to the story. With the implosion of FTX, it has already been reported that between one to two billion dollars in clients’ funds have disappeared. Not only that, but investors in the company, including pension funds and venture capitalists, are writing down losses in the hundreds of millions of dollars. Even movie stars and sports personalities that worked to promote FTX are already facing lawsuits. There is tremendous confusion, and untangling the mess will take years.

With these large and sudden losses comes the fear of contagion. In other words, there is a threat that the FTX bankruptcy could impact traditional markets as well. It could ‘infect’ other markets. That’s contagion. Another way to express that connection is to say that the implosion of this company, with losses of billions of dollars, has caused a ‘spillover effect’.  When regulators hear words like contagion and spillover, they get worried.

The New York Times article goes on to say:

Lawmakers are also gearing up. Treasury Secretary Janet Yellen said on Wednesday that the crypto market needs more oversight, adding that the sector’s links to the broader financial system could cause wider stability issues.

Gearing up‘? Well, that means getting ready. And ‘oversight’? That means reviewing and monitoring.

Time will tell what exactly the implications will be. Let’s keep our eyes on this story.

Okay… Listen up! Here is the key vocabulary from this lesson.

Vocabulary Review

  • Implosion: A collapse.
  • To digress: You ‘digress’ when as you speak or write, you switch to a different, but related point. To digress. You’d say, ‘Let me digress for a moment’.  

Next, the three traditional features of a currency: Unit of account, store of value, and medium of exchange.

  • Contagion: Contagion is where a shock spreads out.
  • Gearing up: to prepare, to get ready.
    • Lawmakers are gearing up
  • Oversight: to review and monitor

Conclusion

If you want to learn more vocabulary related to cryptocurrencies, check out this lesson on Cryptocurrency Worries or our lesson on Crypto Asset Prices Fall.

Friends, before I finish, I wanted to ask you something: Are you somebody that needs to give formal or informal presentations in English? If you are, and you want to do a better job, I want you to know about my new course. This course is a 70-minute master class that will show you different strategies you can use to improve your presentation skills in English, without having to improve your English at all. You just need to change your approach and change your preparation.  

The course is called “How to Give a Great Presentation in English, Even if Your English Isn’t Great”. It will be released on December 1st, but you have until November 30th to register for the presale price of $20. If you consider how even making a small improvement to your presentation skills can deliver great benefits, this price is a bargain. You can sign up for the course here.

You can listen to the audio version of this article here

Until next time!

Image credits: Sam Bankman-Fried, Creative Commons 3.0, author: Cointelegraph

 

Join Our Podcast Club

You Can Also Subscribe to Our Podcast On These Platforms:

Follow us on spotify
Apple Podcast

0 Comments

Submit a Comment

Your email address will not be published. Required fields are marked *

Latest Podcasts

Recession or Soft Landing?

Recession or Soft Landing?

In today's episode, we'll examine an opinion article that talks about the possibilities of a recession that was published in the New York Times on July 24th, 2023.  In this podcast, I will introduce some really useful vocabulary that will help you discuss the issue of...

Copper Prices

Copper Prices

In today's episode, we'll examine an article titled 'Copper is unexpectedly getting cheaper', published in the Economist magazine on July 6th, 2023. We will see why copper is getting cheaper, and you’ll learn some useful vocabulary along the way....

What Are Carbon-Linked Bonds?

What Are Carbon-Linked Bonds?

Welcome to episode 76 of English for Economists. Today, we will be looking once again at an issue related to climate change, and the role economics can play in reducing air pollution. We’ll be diving into these terms: 'Carbon pricing',  'Carbon-linked bonds',...

Ireland’s Fishing Industry

Ireland’s Fishing Industry

[Music Break] Today, in our 74th podcast, we're examining a significant economic news piece while learning four key vocabulary words: "Death by a thousand cuts," "Fleets," "Quotas," and "Scrap." Let's take a look at today's headline: “'Death by a Thousand Cuts' for...

Debt Ceilings and ‘A Stitch in Time Saves Nine’

Debt Ceilings and ‘A Stitch in Time Saves Nine’

Last week, we looked at how investors were reacting to fears that the US government would reach its legally allowed spending limit, leading to spending cuts and loan defaults. The vocabulary we covered was: brace, debt-ceiling, and default. Brace meant to hold on...

Share This