FTX has always had massive ambitions. Besides making money off of transaction fees and interest income, they also introduced their own cryptocurrency token, FTD. And this coin seems to be at the heart of this near collapse. Nobody is certain about the precise mechanics but there are a couple of narratives floating around right now. Some people believe that FTX loaned out money to fund customer trades by using their own money or borrowing it from outside. A more benign explanation is that FTX simply didn't have enough to cover all client holdings.