On the tails of several recent cryptocurrency exchange crashes comes a casualty that leaves them all behind: the bankruptcy of FTX, the fourth-largest crypto exchange in the world. After being valued at $32 billion last January, the cryptocurrency giant descended into insolvency in a matter of 10 days this November.

If the colossal failure of FTX is any indication, the crypto market already faces an uphill battle amidst increased volatility – but if altcoin companies wish to have any hope of navigating the uncertainty, they must learn from FTX’s mistakes. So where did FTX go wrong?

What happened to FTX?

The FTX meltdown all started after problematic connections between FTX and its sister firm Alameda Research were discovered. After reviewing an Alameda Research balance sheet, Coindesk staff revealed it was filled with FTT, FTX’s native alternate coin, which offers holders of the coin decreased trading fees and rewards and can be used as collateral. As of June 30, $5 billion of Alameda Research’s $14.6 billion total assets consisted of FTT and FTT collateral – and at the time, the firm also had $8 billion in liabilities, mostly comprised of loans.

Just a few days after the Coindesk story broke, Binance, the world’s largest cryptocurrency exchange, announced it would sell all 32 million of its FTT tokens for about $2.1 billion. Binance CEO Changpeng Zhao stated that the decision to sell their stake in FTT was done as risk management and not to outcompete FTX. But when Alameda offered to buy the tokens at $22 apiece, Binance rejected the offer.

Over the next few days, FTT holders made $6 billion worth of withdrawals, a drastic increase from the mere tens of millions traded daily on average. Before the Binance announcement, FTX was trading at roughly $25, but by November 9 the token was worth less than $3. Initially, it appeared that FTX might be saved when Binance signed a non-binding agreement to acquire it, but Binance eventually backed out of the deal after learning about FTX’s alleged misuse of customer funds. FTX was left isolated, with insufficient capital to meet the withdrawal demand, and on November 11, FTX, Alameda Research, and 130 other affiliated companies filed for Chapter 11 bankruptcy.

Recent court filings indicate that FTX may owe up to 1 million creditors, with $3 billion due to the top 50 alone.

What does this mean for cryptocurrency going forward?

The bankruptcy of prominent cryptocurrency firms FTX and Alameda Research is not unprecedented: this past spring still marked the largest crypto crash to-date with the fall of crypto leader Luna, which resulted in a $60 billion market loss. A few months later, crypto exchange Celsius also declared bankruptcy.

But that doesn’t mean the FTX failure isn’t seismic. Following the FTX collapse, prices of industry leader Bitcoin fell 22%, prompting government officials to call for greater regulation on crypto, including U.S. Treasury Secretary Janet Yellen, who issued a warning to the industry.