Abstract

2022 became a year of lessons for the Crypto world, it brought an end to the 'Cryptocurrency age of Innocence. It brought to light, the fallacies of the Crypto world, which shook the core of the global digital asset market. The sudden collapse of FTX unearthed multiple fundamental, regulatory, and0 policy-based flaws that have plagued the cryptocurrency industry at large. The following essay outlines the events that led to the Lehman moment of the crypto world- FTX collapse. The paper puts a focus on the history of the two most catastrophic economic events that shook the global economy, that is, the collapse of Lehman Brothers and FTX, bringing how these two events, though occurring in two different decades have become a lesson for investors all over the world. Research methodology along with an analytical study has been used to draw out the several risks as well as liquidity imbalances between the assets and liabilities of FTX, which manifested directly in the collapse of the exchange and subsequently led to contagion effects across a range of financial market products. It also, uses qualitative and quantitative analysis, to study the effects that the FTX collapse has had on the crypto regime in India and how India must come up with an effective regulatory framework.

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