FTX: From $32 Billion to Bankruptcy in Nine Days

On 2 November 2022, the crypto news site CoinDesk published a leaked balance sheet. It belonged to Alameda Research, the trading firm owned by Sam Bankman-Fried, and it showed that much of Alameda's $14.6 billion in assets was FTT, a token created by FTX, the exchange Bankman-Fried also owned. Nine days later, on 11 November, FTX filed for bankruptcy. A company valued at $32 billion in January had gone to nothing in less time than it takes most people to get a parcel delivered.

FTX was the golden child of crypto. Bankman-Fried, a 30-year-old former Wall Street trader with unkempt hair and a habit of sleeping on a beanbag in the office, built it from its launch in 2019 into one of the largest crypto exchanges in the world. An exchange works like a stockbroker for crypto: customers deposit money, trade, and trust the firm to hold their balance. FTX bought the naming rights to the Miami Heat's arena, ran a Super Bowl advert starring Larry David, and signed up celebrities from Tom Brady to Steph Curry. Bankman-Fried was one of the biggest political donors of the 2022 US midterm elections and spoke to Congress about how crypto should be regulated.

The Run

The CoinDesk story mattered because of what FTT was. It was an in-house token, roughly like a loyalty point that FTX issued itself, and its price depended on confidence in FTX. If Alameda's wealth was mostly FTT, then Alameda's balance sheet rested on FTX, and FTX, it turned out, rested on Alameda.

On 6 November, Changpeng Zhao, the chief executive of the rival exchange Binance, said on Twitter that Binance would sell its remaining FTT, a holding reported at about $580 million. Customers rushed to withdraw: about $6 billion in 72 hours, Bankman-Fried told staff, according to Reuters. On 8 November FTX stopped processing withdrawals, and Binance signed a non-binding deal to buy it. The next day Binance walked away, citing what it found in FTX's books and reports of mishandled customer funds. On 11 November FTX, Alameda and about 130 related companies filed for Chapter 11 bankruptcy in Delaware. Bankman-Fried resigned. That night hundreds of millions of dollars in crypto were drained from FTX wallets in a theft that remains a separate story.

Where the Money Went

Customers' money had not been sitting in the exchange. Prosecutors showed that FTX had sent billions of dollars of customer deposits to Alameda, which spent it on trading, venture investments, loans to executives, property in the Bahamas and political donations. Among the investments was a stake of about $500 million in Anthropic, an artificial intelligence company. Gary Wang, FTX's co-founder and chief technology officer, testified that he had written code that let Alameda run a negative balance on FTX and gave it a line of credit of $65 billion, something no other customer had. The shortfall to customers came to about $8 billion.

John J. Ray III, the restructuring lawyer who had cleaned up after the collapse of Enron, took over as chief executive. In his first court filing he wrote that he had never seen "such a complete failure of corporate controls". FTX had no proper list of its bank accounts and paid some expenses through a chat app where staff approved spending with emoji.

Trial and Sentence

Bankman-Fried was arrested in the Bahamas on 12 December 2022 and extradited to New York. His trial in October 2023 turned on testimony from his closest colleagues: Caroline Ellison, Alameda's chief executive and his former girlfriend; Wang; and Nishad Singh, FTX's head of engineering. All three had pleaded guilty and agreed to cooperate. On 2 November 2023, a year to the day after the CoinDesk story, a jury convicted him on all seven counts of fraud and conspiracy after deliberating for less than five hours.

On 28 March 2024 Judge Lewis Kaplan sentenced him to 25 years in prison and ordered him to forfeit about $11 billion. Ryan Salame, another FTX executive, was sentenced to seven and a half years for campaign finance and money transmitting crimes. In September 2024 Ellison received two years; Wang and Singh were sentenced to time served. Ellison left federal custody in January 2026 after about 14 months. On 12 June 2026 a three-judge panel of the Second Circuit Court of Appeals unanimously rejected Bankman-Fried's appeal, upholding his conviction, his sentence and the forfeiture.

Paid Back, On Paper

Then came the twist. Ray's team clawed back money from Alameda's investments, sold the Anthropic stake and other assets, and settled with dozens of counterparties. The plan approved in October 2024 put the money available for creditors at between $14.7 billion and $16.5 billion, more than customers were owed.

The FTX Recovery Trust began paying in February 2025, with small claims of under $50,000 first. Further rounds followed in May and September 2025, a fourth of about $2.2 billion on 31 March 2026, and a fifth of about $900 million from 31 July 2026. By then total payouts were above $10 billion. Small claimants have received 120% of their account values, and international and US customers stood at 105%.

The catch is in the date. Claims were valued at crypto prices on the day of the bankruptcy filing in November 2022, when bitcoin traded around $16,000. By the time payouts began, it was worth several times that. A customer who held one bitcoin on FTX got back dollars worth a fraction of a bitcoin. Many creditors said they had been repaid in full on paper and still lost most of what they owned.

FTX's collapse helped push other crypto lenders, including BlockFi and Genesis, into bankruptcy, and it became the case regulators cited for years afterwards. It was crypto's Lehman Brothers moment: the event that showed the industry had rebuilt most of the old financial system's worst habits without its safeguards.