Lesson 1 opens on
The ledger that was not the chain
The CFTC's February 2023 complaint against FTX engineering director Nishad Singh alleges that FTX customer assets were accepted, held and misappropriated by the affiliated trading firm Alameda Research from May 2019, unbeknownst to all but a small circle of insiders. Alameda was exempt from the exchange's auto-liquidation engine; 'allow negative' and 'can withdraw below borrow' functions Singh created in 2019 were later extended to Alameda's accounts, and an August 2020 feature sent an alert in place of liquidating it. The liability sat inside FTX's own ledger: an internal account carried as much as $8B owed in customer fiat, a balance sheet Bankman-Fried prepared for investors called it a hidden, poorly internally labeled account, and after a mid-2022 transfer the $8B negative balance was no longer readily apparent on FTX's ledgers.
The lessons
- S209-01How an exchange actually worksDescribe what happens between placing an order and settlement, and where the chain is not involvedabout 30 min · opens on The ledger that was not the chain
- S209-02The full order type inventoryClassify every order type by the two variables it fixes and the one it leaves openabout 32 min · opens on When the book went to 2 percent
- S209-03Account architectureDistinguish isolated from cross margin, and compute what each does to a portfolio in stressabout 32 min · opens on Auto-deleveraging, 10 October 2025
- S209-04The product menu as a risk mapDraw the dependency graph of an exchange's products rather than reading them as a listabout 31 min · opens on Three collateral assets, one account
- S209-05Fees, tiers, and the real cost of activityEnumerate every charge on an exchange account, including the ones with no line itemabout 40 min · opens on Commission free, and the $34.1M it cost
- S209-06Counterparty risk, seriouslySeparate the four counterparty exposures and identify which are negotiableabout 30 min · opens on Ten years, and the decision to compensate
- S209-07Operating on a CEX professionallyConfigure an account once, in the order that makes each setting effectiveabout 31 min · opens on Everything in this course, on one day
Labs
S209-L
Map an exchange's full product menu into a dependency diagram: which products share collateral, which can trigger liquidation in which others, and what a 60 percent drop in the most illiquid holding does to the account.