The more that comes out about the demise of ftx, the more shocking the tale becomes. The exchange’s own terms of service said it would not lend customers’ assets to its trading arm. Yet of $14bn of such assets, it had reportedly lent $8bn-worth to Alameda Research, a trading firm also owned by Mr Bankman-Fried. In turn, it accepted as collateral its own digital tokens, which it had conjured out of thin air. A fatal run on the exchange exposed the gaping hole in its balance-sheet. To cap it all, after ftx declared bankruptcy in America, hundreds of millions of dollars mysteriously flowed out of its accounts.

Big personalities, incestuous loans, overnight collapses—these are the stuff of classic financial manias, from tulip fever in 17th-century Holland to the South Sea Bubble in 18th-century Britain to America’s banking crises in the early 1900s. At its peak last year, the market value of all cryptocurrencies surged to the giddy height of almost $3trn, up from nearly $800bn at the start of 2021. Today it is back at $830bn.

As at the end of any mania, the question now is whether crypto can ever be useful for anything other than scams and speculation. The promise was of a technology that could make financial intermediation faster, cheaper and more efficient. Each new scandal that erupts makes it more likely that genuine innovators will be frightened off and the industry will dwindle. Yet a chance remains, diminishing though it is, that some lasting innovation will one day emerge. As crypto falls to Earth, that slim chance should be kept alive.

[I’ll have a podcast interview with crypto expert Rob McNealy tomorrow. In it, he and I point out that the failure here wasn’t crypto itself, but instead regulatory and political failure married to the kind of scam that could have used practically any other commodity, including normal currencies. — Ed]