November 11, 2022, FTX, a $32 billion cryptocurrency exchange company that many believed would “change the world,” filed for bankruptcy. This news shook the crypto and financial communities, compelling many to debate the future of the crypto market and its platforms.

How did FTX collapse?

You could say that FTX’s collapse began before the news broke, but here’s a summary of events as The New York Times and ABC News details:

Breaking news

In early November, CoinDesk, a crypto publication, broke the news on a leaked document from FTX. The balance sheet showed that the hedge fund run by Sam Bankman-Fried (SBF), Alameda Research, held a substantial amount of FTT tokens. In short, SBF had set up Alameda (his trading firm) and FTX (his exchange firm) in such a way that if one unit experienced trouble, such as dropping cryptocurrency prices, the other experienced it, too.

First domino falls

By the way, FTT is used for various functions, including traders’ payment of operation fees. Also, by the way, Changpeng Zhao, Binance’s Chief Executive, sold his stake in FTX to SBF in 2021, partially with FTT. So, “due to recent revelations,” Binance (Zhao) announced on November 6, 2022, that it would sell its FTT tokens.

Other dominos follow

Traders responded; they hurried to pull funds out of FTX out of fear, and FTT’s price fell. Meanwhile, FTX processed withdrawal requests over three days, amounting to an estimated $6 billion. The liquidity crunch was upon it.

Then, on November 8, Binance said it would bail out FTX. But on November 9, Binance backtracked and announced in a Tweet that it would not “as a result of corporate due diligence,” while also citing regulatory investigations and reports of mishandled funds.

Things get worse

The next day, November 10, the Securities Commission of the Bahamas froze FTX’s assets, citing the public statement about potentially “mishandled” and “mismanaged” customer funds. On November 11, FTX filed for Chapter 11 bankruptcy protections, and SBF resigned as CEO. John J. Ray III—famously known as the CEO who headed the infamously known energy company, Enron, through its collapse in the 2000s—replaced SBF on November 17.

Fallout

Today, FTX faces federal investigation for securities laws violations based on a report by The Wall Street Journal regarding FTX lending customer deposits to Alameda Research for liabilities, of which the company’s top executives were aware. Investors have suffered loss, traders have suffered loss, and the greater crypto community and regulators are asking questions.

FTX and SBF web data analysis

News about FTX’s collapse generated tons of web data for us to scour. With this data, here’s what we aimed to find out:

• How did the public web react to FTX’s collapse?
• Could we have seen red flags before the news broke?
• What was FTX’s collapse’s effect on the cryptocurrency market’s sentiment?
• Is it possible to evaluate cryptocurrency exchange companies’ ESG risks and opportunities?
• Was FTX’s collapse unprecedented? If not, what does web data tell us about that?

FTX and Sam Bankman-Fried mentions analysis

Web public sentiment for FTX and SBF was consistently positive until Q1 of 2022. As mentions volume increased, their sentiment polarity decreased (Figure 1). The mentions spike for both in November when CoinDesk broke the news. Likewise, polarity dips into the negative range for both.

Definition: Polarity represents the aggregate of positive and negative sentiments (opinions or reviews) on a company. A 0 score means there is as much positive as negative sentiment expressed. The dotted and dashed lines represent sentiment in the following charts.

Looking closer at Q1 (Figure 2), we find that mentions affecting sentiment increased for FTX and SBF during this period. What are the mentions about, and why did they affect polarity negatively?

It turns out that SBF is linked to other keywords—we call these co-mentions—and between January 2022 and November 2022, SBF/withdrawal co-mentions (Figure 3) spiked in July when SBF defended Terra Luna’s founder, who was accused of peddling a Ponzi scheme.

If withdrawal co-mentions brought up possible reasons why SBF and FTX experienced dips in sentiment, what other co-mentions could give us more insight? How about donations, SEC, and U.S. elections?

Bankman-Fried has exhibited patterns of making political statements, attempting to influence crypto regulations, and donating funds before elections. It should be no surprise that SBF’s co-mentions with C-level unethical practices yield additional data.

Note: To see the co-mentions with unethical practices chart, contact a SESAMm representative today.

Sam Bankman-Fried ESG risk analysis

Corporate governance stands out when evaluating SBF’s ESG risks, but his social risks are nothing to ignore either.

Two areas of governance risks to note are money laundering and board of directors (Figure 5). Money laundering as a co-mention has been an issue as early as February 2022, but it became a bigger issue in October. These risks may be popping up due to allegations of manipulating the price of the APT token and a securities violations probe.

Note: To see the social risks over time chart, contact a SESAMm representative today.

FTX and crypto market web data analysis

If you’ve read this far, you by now get an impression of FTX and SBF, from mention volume to sentiment analysis and ESG risk. But how did FTX’s collapse affect the overall cryptocurrency market? Let’s find out.

In comparing the sentiment polarities for FTX and the crypto market from January 2021 through November 2022 (Figure 6), the sentiment for crypto remains relatively steady despite FTX’s sentiment taking a hit.

When comparing other cryptocurrency exchanges to FTX (Figure 7), sentiment polarity for them is hardly affected, except Binance, because of its connection with FTX. Oddly enough, eToro experienced a boost in sentiment, possibly because of its core values around openness and transparency, the fact that they’ve been around since 2007, its early compliance with regulations (i.e., AMF, FCA, ASIC, BaFin, and ACPR), and that it also proposes investing in stocks and ETFs, a contrast to most other crypto market exchanges. Bitfinex has its own issues, so its dip in sentiment might not be correlated.

At this time, FTX’s ESG risks based on the mention volume are only surpassed by Bitfinex (Figure 8), which its risks are based on many other reasons we won’t get into in this article.

Note: To see a comparison chart of social and governance risks for each exchange, contact a SESAMm representative today.

Centralized vs. decentralized crypto exchange platforms

FTX’s collapse also affected sentiment around the centralized vs. decentralized debate. Since October 2022, sentiment for centralized exchange platforms, such as FTX and its competitors, has fallen (Figure 9).

Likewise, the mention volume for self-custody has more than doubled in the last couple of months (Figure 10). Although centralized platforms offer quicker and easier access to crypto trading, traders are considering complex but more secure options such as crypto wallets and keys because, like banks, centralized exchanges can do what they will with cryptocurrency while it’s in their possession. With self-custody, owners are in control.

Note: To see additional charts, such as competitive data share for crypto wallets, contact a SESAMm representative today.

FTX not the first exchange collapse

Believe it or not, FTX was not the first crypto exchange to collapse. In 2014, Mt. Gox—the biggest crypto exchange at the time—lost half a billion dollars worth of Bitcoin due to a hack. How did Mt. Gox’s collapse affect sentiment for the crypto market then? The short answer is: It didn’t.

Figure 11 shows that while Mt. Gox’s sentiment polarity fluctuated, even reaching negative territories, the sentiment for the crypto market remained relatively stable and positive.

Is FTX’s collapse a warning for investors?

Our analysis is that investors should treat cryptocurrency exchanges like any investment opportunity. Do your due diligence and monitor your portfolio with tools like SESAMm’s TextReveal®.

As for the cryptocurrency market, data shows that sentiment for it remains level and positive. We speculate that cryptocurrency and centralized exchanges are here to stay. However, based on historical data and current news, we suspect conversations about crypto regulations to increase.

Reach out to SESAMm

For a deeper analysis of FTX’s collapse and access to all charts and supportive-article links, reach out to a representative today.

Teams that monitor ESG controversies usually have the opposite of an information shortage. A single incident can generate dozens of articles within a few days, each covering the same underlying event, often repeating the same facts with a few new details.  At a certain point, the sheer number of articles makes it hard to tell which developments are material and which are just the same story told again.

The volume is the part that breaks traditional approaches. Millions of articles are written every day across hundreds of languages, more than any team of analysts could read, let alone reconcile into a clear timeline of an evolving controversy. This is not a problem you solve by adding more people; the scale is on a different order of magnitude from human reading speed.

What changed is that language models can now read, categorize, and evaluate. They cover that volume in every language, judging whether two articles describe the same incident, whether one marks a new development, and how incidents link into a single controversy over time.  Leveraging the latest AI models is the only way to structure this much material and generate daily updates. 

SESAMm runs this across the ten million documents it ingests each day, from more than four million sources in over 100 languages, including premium news wires, NGO bulletins, company communications, and discussion forums. The result is ESG controversies organized into three layers: articles, events, and cases.

From Articles to Events to Cases

Each layer builds on the one below it, and each answers a different question an analyst needs answered.

Articles are individual news articles or documents: the raw material.

Events group the articles that describe the same specific incident or development. When forty outlets cover the same supplier labor issue, those forty articles become a single event, with the underlying coverage attached. Articles published close together in time and describing the same development are grouped; an article describing a genuinely new development, even on the same broader topic, forms a separate event. A strike in 2022 and a similar strike in 2024 at the same supplier are recorded as two events, because they are distinct incidents rather than a continuation of one.

Cases sit above events. A case ties together the events that belong to the same underlying controversy as it unfolds, with no fixed time limit. An oil spill, the regulatory investigation that follows it, and the settlement that closes it months or years later are three separate events but one case.

Articles tell you what was written, events tell you what happened, and cases tell you how a controversy is developing. All three sit in the same view: one entry per controversy, with the chronology of events nested inside it and the source articles a click below that.

Why the Underlying Data Matters

A three-layer structure is only as good as the data underneath it. To capture a controversy from start to finish, that data has to include the early signals that appear in regional press, NGO bulletins, or non-English sources before larger outlets report them, sometimes days later.

SESAMm's coverage spans more than 100 languages and extends well beyond mainstream news wires, so its cases are built on a wider base than most monitoring platforms screen. A controversy that starts in a local-language outlet, moves through regional media, and reaches the international press is captured as a single continuous case, rather than surfacing as disconnected alerts or being missed altogether in its early stages.

What Does This Change in Practice?

Three things change in day-to-day work.

The count starts to mean something. A rise in the number of cases reflects new controversies emerging, not an old one being picked up by more outlets.

Trajectories become visible. As a case accumulates new events over the months, the progression from complaint to investigation to hearing to settlement is easy to follow, rather than being buried in hundreds or even thousands of articles. 

Analysts spend their time differently. Less of it goes to clearing duplicate headlines, and more to the important judgment calls. 

What This Looks Like in the SESAMm Dashboard

In the dashboard, a company appears as a single entity with its related cases listed beneath it. Each case includes a controversy summary, an ESG risk classification, and an intensity score, with related events nested underneath and the original source articles just a click away. A case that draws on hundreds of articles becomes a short, readable list instead of hundreds of separate incidents.

Every case is fully traceable. Analysts can drill from a case down to its events, and from any event to the articles that produced it. The time period is set from the top of the dashboard, so older incidents do not crowd the view when the focus is on recent activity.

Reducing Noise in Adverse Media Monitoring

In practice, those forty articles collapse into one event, and that event sits inside a single case that is still developing, caught early and drawn from sources most platforms never see.

Grouping articles into events removes duplication caused when many outlets cover the same incident. Grouping events into cases keeps a controversy intact as it develops, rather than scattering it across months of separate alerts. Because this runs across ten million documents a day in more than a hundred languages, it holds up even for controversies that start far from the mainstream press.

The result is a view where the numbers carry meaning, the direction of an issue is clear, and the underlying articles stay one click away for full validation. 

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SESAMm, leader mondial de la donnée de controverses, annonce le renouvellement de son partenariat avec Praemia REIM autour de son outil de suivi des controverses ESG. Grâce à l’exploitation de sources d’information internationales, à l’intelligence artificielle et à une revue par des analystes, la solution permet une détection des risques réputationnels et extra-financiers liés aux actifs immobiliers. Ce dispositif s’inscrit dans une démarche globale de maîtrise des risques ESG et d’amélioration continue des pratiques responsables.

Un outil au service de l’engagement dans l’immobilier de santé

Praemia REIM utilise l’outil SESAMm comme levier de dialogue auprès de ses locataires, notamment dans le secteur de la santé, où les enjeux sociaux et éthiques revêtent une importance particulière. En facilitant une gestion active des controverses, la solution contribue à l’accompagnement des locataires opérateurs de santé, à renforcer la transparence et à répondre aux attentes croissantes des investisseurs en matière d’impact social et de responsabilité des pratiques. SESAMm confirme ainsi son positionnement comme partenaire technologique clé pour les acteurs de l’investissement immobilier responsable.

SESAMm’s AI Technology Reveals ESG Insights

Discover unparalleled insights into ESG controversies, risks, and opportunities across industries. Learn more about how SESAMm can help you analyze millions of private and public companies using AI-powered text analysis tools.