January 13, 2023

The collapse of FTX: What Forex Affiliates Must Be Aware Of

The collapse of FTX

Cryptocurrencies are one of the most profitable assets for forex affiliates. Unregulated digital currencies spearhead the emerging digital economy and are constantly in the news. The massive public interest is great for broker affiliate partners who want to earn high commissions, but what happens when cryptos generate negative publicity?

Anybody who’s watched the news or read the financial press recently will almost certainly have heard the names FTX and Sam Bankman- Fried. FTX hit the headlines when it declared bankruptcy on November 11th, 2022. FTX was the world’s third largest crypto exchange (by volume), and the news shocked the financial world – and crypto traders in particular. 

FTX Crypto Exchange 

Basic background info for forex affiliates

30-year-old American entrepreneur and Stanford graduate Sam Bankman-Fried co-founded a company called Alameda Research in November 2017. Alameda was a trading firm specializing in cryptocurrencies. In 2019 Bankman-Fried founded the FTX crypto exchange to generate funds for Almeda. FTX, with its exchange token FTT, was to be Bankman-Fried’s cash cow. 

Although it’s not believed that this strategy was initially illegal, it clearly needed careful management – and a high degree of transparency – to remain above board. That essential financial integrity appears to have been missing from day one. 

Following allegations that FTX had channeled up to $10 billion from client accounts into Almeda coffers, Sam Bankman-Fried was arrested in the Bahamas on December 12th, 2021. He is now confined to his parents’ California home on $250 million bail. Reuters news agency reported that up to $2 billion of FTX client funds remain unaccounted for. 

Bankman-Fried was charged with various acts of financial fraud, money laundering, and political campaign finance law violations. If convicted, he faces up to 115 years in prison. Given that Almeda Research’s former CEO, Caroline Ellison, and an FTX co-founder Gary Wang have just pleaded guilty to a range of similar charges, Bankman-Fried’s future isn’t looking very bright. 

FTX Collapse Timeline 

●    November 2017 Sam Bankman-Fried co-founds Alameda Research.

●    April 2019 Bankman-Fried and Gary Wang co-found FTX crypto exchange.

●    November 2022 Coindesk news site reports that most of Alameda’s holdings are in FTT.

● November 8th, 2022, Binance CEO Changpeng Zhao announces his intention to sell all holdings of FTT. The announcement triggers a sudden decline in the value of FTT and other cryptos.

●    November 9th, 2022, Zhao initially announced his intention to buy FTX, leading to an 80% plunge in the value of FTT. The following day the financial media reported that Zhao withdrew from the deal due to the discovery of financial irregularities at FTX. 

● November 10th, 2022 Within 24 hours of the first news reports, a new story broke that the SEC and CFTC were investigating FTX and its relationship to Bankman-Fried’s other holdings. 

● November 11th, 2022 Sam Bankman-Fried resigns as CEO of FTX, and the exchange files for bankruptcy on the same day. 

● December 12th, 2022, Bankman-Fried is arrested in the Bahamas at the request of the US authorities. He returned to the US and is now free on a record $250 million bond. 

What Does the Collapse of FTX Mean for Forex Affiliates

The collapse of FTX probably won’t mean very much for forex affiliates in the long term. Cryptocurrencies and crypto exchanges are part of the financial landscape and are here to stay. The collapse of FTX, and the significant financial scandal that is emerging, may push the authorities towards tighter regulation of digital currencies – or at least of crypto trading. Public demand for cryptos shows no real sign of slowing. 

The FTX scandal will be back in the headlines in the short term in 2023. The volume and duration of news coverage will depend on whether Sam Bankman-Fried pleads guilty or attempts to fight the charges in court. A protracted trial will generate a media circus and keep the case on the front pages, particularly if there are fresh revelations or the defense tries to implicate or embarrass high-profile political or business figures.

Prosecutors are believed to be looking to send a clear message to the crypto community with the trial. It’s possible that they already have enough solid evidence to convict Bankman-Fried on at least some of the counts of fraud – especially given that two of his key associates already pled guilty to a selection of charges. Bankman-Fried may not be well placed to negotiate an advantageous plea bargain with prosecutors. It’s possible that (if convicted) the judge will make an example of him. 

How Forex Affiliates Can Use the FTX Case 

There are no bad news events when you’re promoting forex and cryptos as a broker affiliate partner. It’s the nature of the markets that when one asset declines in value or receives negative publicity, another asset will rise. Even in the worst bear markets, there are still great marketing opportunities. When cryptos are getting bad press or traders are getting jittery, your initiative and creativity will continue to convert traffic and earn high commissions. 

As long as Bankman-Fried and FTX are in the news, you’ll have unlimited opportunities to generate high-value content for your social media channels, websites, and blog posts. An excellent technique for social media marketing is to use questions to generate user interest, spark debate and encourage people to like, share or click on your affiliate links. 

An ongoing trial or a developing scandal is great for social media. All big cases attract followers for whom trials are real-life soap operas. Even serious investors and financial commentators get drawn into the drama and love to speculate and offer their opinions. A subscription to Google Alerts and a quick daily scan of the news will provide you with useful quotes and comments to build posts around. 

Suppose the FTX scandal continues to influence the value of cryptos (the initial breaking news in November 2022 hit Bitcoin and other crypto prices hard). In that case, you’ll have plenty of material to work with. Use financial charts as images and ask questions to generate user engagement. If you have some market knowledge or an excellent financial content writer, aim to upload serious analysis pieces to your blog and website. 

Use Volatility as a Selling Point

One reason why cryptos like Bitcoin are so newsworthy is their inherent volatility. The last few years have seen massive price surges followed by sudden plunges. Traders who can hold tight and navigate the roller coaster momentum of top cryptos have made fortunes. If the price of cryptos is currently depressed, start a debate about when they will rise again and whether now is the right moment to buy cheaply. 

Conversely, you can feature typically stable cryptos like Ethereum or Litecoin. You can make the point that a sliding scale of risk/reward in 2022 may continue in 2023. Cryptocurrencies don’t have to be high-risk investments; new traders can begin by exploring lower-risk/lower-return digital currencies.  

Promote Other Assets as a Forex Affiliate

If cryptocurrencies are taking a hit due to the FTX scandal (or any other global events), you can always shift your marketing focus toward other assets. A top international broker like AvaTrade has an entire selection of asset classes, ranging from top-rated and well-known stocks and commodities to niche assets like ETFs, bonds, and options. 

If cryptos appear too risky and temporarily lack credibility for the average new trader, you can promote traditional forex. Major currencies like the US dollar, euro, British pound, and Swiss franc are always in the news and deliver round-the-clock trading opportunities. There are many basic similarities between online crypto trading and online forex trading. You won’t need a major shift in your marketing strategies and styles.

Make Money as a Forex Affiliate in 2023

The collapse of FTX and the scheduled trial of Sam Bankman-Fried is probably just a ‘stutter step’ in the evolution of digital currencies. Cryptos are rapidly moving from the financial fringe towards the financial mainstream. We expect to see greater official regulation of crypto exchanges and other digital financial service providers due to the FTX scandal, but this is likely to build consumer trust in the medium term. 

There will likely be plenty of exciting opportunities to make money as forex and a crypto affiliate in 2023 and earn high commissions promoting a range of other assets. Regardless of the market conditions or more comprehensive trader confidence, the primary key to success as a forex or crypto affiliate is working with a professional and experienced partner program. 

AvaPartner is offering flexible commission structures for affiliate partners who want to make money promoting cryptocurrencies and other popular and profitable asset classes. When you sign up with AvaPartner, you’ll also promote a fully regulated broker with over 15 years of experience and a solid worldwide reputation. The potential to build a long-term partnership and develop reliable passive income streams is enormous!

Become a forex affiliate now

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