FTX Bankruptcy: Does Brand Design Really Influence Financial Collapse?

Whether or not you are familiar with the crypto world and the fintech environment, you have probably heard about a shocking piece of news from a few years ago: FTX, a major cryptocurrency exchange platform (exchange), declared insolvency and filed for bankruptcy, marking the first of a series of significant events in that industry.

The news spread widely, fueling confirmation bias about the volatility of the crypto-asset market. However, the general consensus regarding the collapse of one of the world's largest exchanges usually focuses on the financial aspect. Analysts, economists, and journalists explain that the company leveraged its own tokens to finance its other company (Alameda), leading to an insolvency situation that concluded with the bankruptcy of the FTX giant.

Looking at this part of the story, everything seems coherent: it is a financial phenomenon derived from decisions made by CEO Sam Bankman-Fried, the crypto world's youngest billionaire (Forbes, 2021). What not everyone knows is that the analysis of this case was also addressed by graphic designers who argued that while an economist might master financial statements, they might not know the real causes of an event of such magnitude. There were plenty of designers who suggested that a poorly designed logo could also be the cause of problems like this.

Leveraging proprietary assets, fraudulent handling of client funds, government conspiracy to regulate the market? None of that. For some graphic designers, the problem was the design of the FTX logo. But... what exactly was wrong with the logo in this specific case?

• Does it have an appropriate graphic style for a leading global, institutional exchange with public reach, a sponsor of multiple brands and events, its own token, and an investor in other companies? It seems so; it meets the criteria.
• Does it need a symbol in addition to its name in the logo? It doesn't seem contraindicated; in fact, that symbol performs correctly.
• Does it have high graphic quality? The construction of the symbol, the typography used, and the overall composition result in a piece of acceptable graphic quality.

We could continue analyzing the graphic mark, but it seems that the premise of these designers does not hold up against a technical analysis: the logo actually doesn't fail; it is adequate. Therefore, that hypothesis appears to be incorrect: the logo had nothing to do with it.

In fact, the logo is adequate. Even so, we have to admit that it did not help mitigate the problem by dissuading users from withdrawing their funds. Ultimately, the FTX logo did not save the company from failure, despite being well-designed. How is this possible? Don't we often hear in the discourse of many marketing and branding agencies, and in professional discussion forums, that a logo is the cause of a company's success?

The Relationship Between Design and Economic Success

Reality shows that good brand design does not guarantee a company's economic success, as evidenced by the FTX case. Nor can this logo-success relationship be quantified. The same is true in the opposite case: a poor graphic mark does not necessarily go hand-in-hand with a company's economic failure. There are cases of brands that are leaders in their markets, with logos that fail not only in their stylistic appropriateness but also have terrible graphic quality. Truly “ugly” brands.

Are these brands wrong? Should they change? It depends on the case, but these two examples shown (Davivienda and La Serenísima) are brands with extremely high reach to the mass consumer public and significant commercial presence. I make this clarification because, assuming these companies wanted to “do things right” and decided to make important changes to their identifiers, they would necessarily suffer some loss of the brand equity accumulated in those signs already established and recognized by the public. It could be said that the greater the brand equity accumulated in the graphic mark, the greater the risk of partial loss of that capital.

Undoubtedly, brands of such magnitude can face this cost by investing in advertising campaigns or launches that adequately publicize and explain any graphic brand change. What if they didn't change anything? Most likely, they would remain the same successful and profitable brands they have been for many years. So, what is the real value that design brings to the brand?

The Performance of a Brand

If the graphic style fails and the brand of a commercial bank looks like that of a children's daycare or a small startup project, the public will have to learn that “what it looks like is not what it is.” That is an inconsistency that reduces brand performance. The same happens if the logo cannot be reproduced in all its necessary uses so that it is always perceived as the same, or if its ability to sign different types of discourse is low because it has a less versatile style than necessary (imagine a financial crisis statement next to the little house symbol of Davivienda).

Perhaps the brand has no problems with style, reproducibility, or versatility, and yet it might still have poor graphic quality. Poor graphic quality also reduces performance, because someday someone will realize that the mark is of poor graphic quality and it will have to be replaced. It is better to do it sooner rather than later, as the performance of a graphic mark increases the longer it is used.

And returning to the FTX case, it is evident that, despite having a more or less adequate graphic identifier, it did not serve to prevent the disaster. So, what would be the point of optimizing brand design to ensure the highest possible performance? The answer is a question: “What would be the point of not doing things as well as possible?” Having a correctly optimized brand guarantees a greater return on identification resources for the time it is used. Nothing more. Isn't that incentive enough?