Reputational contagion and the fall of FTX: Examining the response of tokens to the delegitimization of FTT

Imran Yousaf and John W. Goodell

Finance Research Letters, 2023, vol. 54, issue C

Abstract: Intertwined with the recent fall of cryptocurrency exchange FTX was the unveiling to investors of the lack of asset support for FTX's flagship token FTT. Given interest in reputational contagion, as well as recent academic and investor interest in digital tokens, we are motivated to take advantage of the FTX/FTT event to investigate reputational contagion to other tokens. We employ an event study approach to gauge the impact of the FTX collapse on a variety of tokens. Results of abnormal returns, as well as CARs and CAARs, indicate almost all tokens initiated a persistent bearish trend on the event day.

Keywords: Reputational contagion; FTX; FTT; Cryptocurrencies; Digital tokens; Event study (search for similar items in EconPapers)
JEL-codes: C23 G10 G14 G18 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:54:y:2023:i:c:s1544612323000788

DOI: 10.1016/j.frl.2023.103704

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