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Understanding the FTX exchange collapse: A dynamic connectedness approach

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  • Akyildirim, Erdinc
  • Conlon, Thomas
  • Corbet, Shaen
  • Goodell, John W.

Abstract

Employing a TVP-VAR dynamic connectedness analysis, we identify avenues through which the collapse of the FTX exchange manifested contagion effects throughout a number of financial markets. Results indicate that interaction effects become significantly pronounced, coinciding with key milestones during the collapse of FTX and related companies. Specifically, sources of contagion stem from two tokens created by the exchange and related companies, namely FTT Token and Serum. Such results further develop the expanding literature based on the inherent contagion effects of such unregulated products.

Suggested Citation

  • Akyildirim, Erdinc & Conlon, Thomas & Corbet, Shaen & Goodell, John W., 2023. "Understanding the FTX exchange collapse: A dynamic connectedness approach," Finance Research Letters, Elsevier, vol. 53(C).
    • Handle: RePEc:eee:finlet:v:53:y:2023:i:c:s154461232300017x
    DOI: 10.1016/j.frl.2023.103643
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    References listed on IDEAS

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    Cited by:

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    7. Gordon, Steven & Li, Zhi & Marthinsen, John, 2023. "A deep analysis of the economics and finance research on cryptocurrencies," Economics Letters, Elsevier, vol. 228(C).

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