FTX

FTX was a cryptocurrency exchange founded in 2019 by Sam Bankman-Fried and Gary Wang, which offered spot trading, derivatives and margin lending, and issued its own token, FTT. It was closely tied to Alameda Research, a trading firm Bankman-Fried controlled and had led from its founding in 2017. In November 2022 a run on the exchange exposed a shortfall in customer funds, and FTX, Alameda and more than 130 affiliated companies filed for bankruptcy on 11 November 2022. Bankman-Fried was convicted of fraud and conspiracy in November 2023 and sentenced to 25 years in prison, and four former associates pleaded guilty. The bankruptcy estate began repaying creditors in February 2025.¹²³

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Alameda Research and founding

Bankman-Fried was chief executive of Alameda Research, a crypto trading firm, from its founding in 2017 until he stepped down in 2021, and of FTX from its founding in 2019 until November 2022. Gary Wang, his childhood friend and former roommate at the Massachusetts Institute of Technology, was co-owner of Alameda and co-founder and chief technology officer of FTX.¹ Nishad Singh, who became FTX's head of engineering, helped Bankman-Fried and Wang start the platform.⁴¹ Caroline Ellison later served as chief executive of Alameda.⁵

FTX Trading Ltd. was based in The Bahamas.⁶ A separate entity, FTX US, operated as a domestic exchange in the United States.²⁷

FTT and Binance

FTX issued its own token, FTT. The SEC later described FTT as a crypto asset security and alleged that Alameda held large amounts of it, that FTT was used as collateral for undisclosed loans from FTX to Alameda, and that Ellison, at Bankman-Fried's direction, bought FTT on the open market between 2019 and 2022 to prop up its price.⁵

Binance had invested in FTX;⁸ when the two agreed a deal in November 2022, Bankman-Fried said FTX.com's "first, and last, investors are the same".⁷ In July 2021 Bankman-Fried bought out the stake held by Binance and its chief executive, Changpeng Zhao, paying with FTT, BNB and BUSD worth about US$1.76 billion. In November 2024 the FTX estate sued Binance and Zhao to recover the payment, alleging that Alameda, which funded it, was already insolvent. Binance called the claims meritless.⁸

Growth

By 2022 FTX customers were trading about US$10–15 billion a day. Alameda was the exchange's largest customer and main market maker, and received a large line of credit on the platform.¹ According to the SEC, FTX raised more than US$1.8 billion from equity investors since at least May 2019.⁶ At its peak FTX was valued at over US$30 billion.⁹

FTX spent heavily on marketing. In March 2021 Miami-Dade County approved a 19-year, US$90 million deal to rename the Miami Heat's arena FTX Arena.¹⁰ In September 2021 it signed a sponsorship with the Mercedes Formula One team, whose cars carried its logo in 2022.¹¹ Singh later testified that he had repeatedly raised concerns with Bankman-Fried about spending on real estate and on endorsement deals "with celebrities [and] stadiums".¹

Regulators alleged that customer money was also used for political contributions.⁶¹² At trial, Ellison testified that customer funds passed through Alameda to Bankman-Fried's political organisation and were spent on donations to congressional candidates and political action committees, and Singh testified that he signed cheques in his own name to conceal the source of such donations.¹

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Balance sheet report and the run

On 2 November 2022 CoinDesk published figures from an Alameda balance sheet dated 30 June 2022. It listed US$14.6 billion in assets, of which the largest single item was US$3.66 billion of "unlocked FTT", with a further US$2.16 billion of "FTT collateral", against US$8 billion of liabilities.¹³ Customers then began withdrawing funds from FTX.¹

On 6 November Zhao said Binance would sell its FTT holdings, calling it "post-exit risk management, learning from LUNA", a reference to the collapse of Terra. Ellison, then Alameda's chief executive, offered to buy Binance's FTT.⁷ According to a message from Bankman-Fried to staff, FTX saw about US$6 billion of net withdrawals in the following days.¹⁴

On 8 November Binance signed a non-binding letter of intent to acquire FTX.com, subject to due diligence; FTX US was not included.⁷ The next day Binance withdrew, saying that after reviewing FTX's finances "the issues are beyond our control or ability to help".¹⁴

Bankruptcy filing and unauthorised transfers

On 11 November 2022 FTX Trading, FTX US, Alameda Research and more than 130 affiliates filed for Chapter 11 bankruptcy in Delaware. Bankman-Fried resigned and was replaced by John J. Ray III, a restructuring specialist who had held senior roles in the Enron bankruptcy.² FTX Digital Markets, the Bahamian subsidiary, was not part of the filing.¹⁵

Within about a day of the filing, crypto assets were drained from FTX wallets in transfers the company called unauthorised. The analytics firm Elliptic estimated the outflow at about US$477 million.¹⁶ In January 2023 the debtors put hacked crypto at about US$415 million across FTX.com, FTX US and Alameda.¹⁷ In early 2024 a federal grand jury in Washington indicted three people, alleging that they had carried out a SIM swap on an employee's phone account on 11 November 2022 and moved more than US$400 million from the wallets of a company that a source identified as FTX.¹⁸

Testifying to Congress in December 2022, Ray said there was "no record-keeping whatsoever", that the business was run using QuickBooks, and that control had been concentrated in "a very small group" of inexperienced people.⁹

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Criminal cases

On 13 December 2022 federal prosecutors in Manhattan, the SEC and the CFTC announced parallel charges against Bankman-Fried.⁶ He was arrested in The Bahamas at the request of the US government and was extradited on 21 December. The same day prosecutors announced that Ellison and Wang had pleaded guilty to charges including wire fraud, securities fraud and commodities fraud and were cooperating.¹⁹²⁰ On 28 February 2023 Singh pleaded guilty to commodities fraud and other charges.²¹⁴

Ryan Salame, a former Alameda executive and co-chief executive of FTX Digital Markets, pleaded guilty in 2023 to conspiring to make unlawful political contributions and to operate an unlicensed money-transmitting business. On 28 May 2024 he was sentenced to seven and a half years in prison.²²²³

Trial, conviction and sentence

A superseding indictment returned in August 2023 charged Bankman-Fried with seven counts: two of wire fraud and five of conspiracy, covering wire fraud, securities fraud, commodities fraud and money laundering.¹ His bail was revoked that August over alleged witness tampering.²⁴ Ellison, Wang and Singh testified for the prosecution, and Bankman-Fried testified that he had not defrauded anyone and had made mistakes, including a lack of oversight.¹²⁴ On 2 November 2023, after a four-week trial, the jury convicted him on all seven counts.¹²⁴

On 28 March 2024 Judge Lewis A. Kaplan sentenced him to 25 years in prison and three years of supervised release, and ordered forfeiture of about US$11 billion. Prosecutors had sought 40 to 50 years and the defence five to six and a half.²⁵²⁶¹ Kaplan found that customers had lost about US$8 billion, investors US$1.7 billion and lenders US$1.3 billion, and said Bankman-Fried had lied under oath.²⁶

The cooperating witnesses were sentenced in 2024. Ellison received two years in prison on 24 September;²⁷ in January 2026 she was reported to have been released after about 14 months, the last part in a halfway house.²⁸ Singh was sentenced to time served on 30 October,²⁹³⁰ and Wang to time served with three years of supervised release on 20 November.³¹³²

Appeal

Bankman-Fried's appeal was argued before the Second Circuit on 4 November 2025. His lawyers argued that the trial had been "fundamentally unfair" because he was barred from presenting evidence that FTX was solvent and evidence about the role of its lawyers.³³ On 12 June 2026 a unanimous panel affirmed the conviction, sentence and forfeiture. It held that his argument that customers would ultimately be repaid had been effectively rejected by the Supreme Court's 2025 decision in Kousisis v. United States, under which fraud does not require intent to cause net loss, and found no error in the trial court's evidentiary rulings, jury instructions, discovery rulings or handling of the advice-of-counsel issue.¹

A pro se motion for a new trial, filed by his mother in February 2026, argued that witnesses including Salame had been deterred from testifying.³⁴³⁵ Bankman-Fried withdrew it in April, but Kaplan formally denied it on 28 April 2026, calling its claims of government threats and retaliation "wildly conspiratorial and entirely contradicted by the record".³⁶³⁵

On 10 September 2026 Bankman-Fried petitioned the Supreme Court to review the conviction and the forfeiture, which he argues violates the Excessive Fines Clause.³⁷³⁸ As of October 2026 the government's response was due, after an extension, on 16 November 2026.³⁷

Clemency

In January 2026 President Donald Trump told The New York Times he would not pardon Bankman-Fried.³⁹ In June 2026 Bankman-Fried's pardon application was listed by the Justice Department's Office of the Pardon Attorney.⁴⁰ On 15 July 2026 the Senate passed by unanimous consent S. Res. 772, a non-binding resolution sponsored by Cynthia Lummis and Ruben Gallego stating that he should not receive clemency.⁴¹⁴²

SEC and CFTC actions

The SEC charged Bankman-Fried with defrauding FTX's equity investors by concealing the diversion of customer funds to Alameda, Alameda's special treatment on the platform and FTX's exposure to Alameda's holdings of illiquid tokens.⁶ Ellison, Wang and Singh agreed to settle the SEC's claims.⁵⁴ In December 2025 the SEC announced final consent judgments, subject to court approval, barring Ellison from serving as an officer or director for ten years and Wang and Singh for eight.⁴³

The CFTC alleged that FTX had caused the loss of more than US$8 billion in customer deposits, partly through code features that let Alameda withdraw customer assets.¹² In August 2024 a court ordered FTX and Alameda to pay US$12.7 billion, comprising US$8.7 billion of restitution and US$4 billion of disgorgement; the CFTC agreed to subordinate its claims to those of victims.⁴⁴ In August 2026 trading and registration bans were entered against Ellison and Wang; the CFTC sought no monetary relief, citing their cooperation, guilty pleas and the criminal forfeiture.⁴⁵

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Bahamas

On 14 November 2022 the Securities Commission of The Bahamas announced that the Supreme Court of The Bahamas had approved provisional liquidators for FTX Digital Markets: Brian Simms and two from PwC.⁴⁶⁴⁷ On 17 November the Commission said it had directed the transfer of FTX Digital Markets' digital assets to a wallet it controlled.¹⁶ In March 2023 the US debtors sued in Delaware for a declaration that FTX Digital Markets owned none of their property, describing it as a "front" for the fraud; the liquidators argued it was the constructive owner of FTX.com's property and that the dispute belonged in The Bahamas.⁴⁸

Plan and distributions

On 7 October 2024 Judge John T. Dorsey confirmed the debtors' plan, which was supported by 96% of voting creditors by number. Customers were expected to receive, on average, 118% of the value of their claims at the petition date.⁴⁹ By March 2025 the estate had about US$11.4 billion in cash for distribution, and claims accrue 9% annual interest.⁵⁰³

Distributions, administered by the FTX Recovery Trust, began on 18 February 2025 with about US$1.2 billion to creditors with claims under US$50,000.³ A second round of more than US$5 billion began on 30 May 2025,⁵¹ and a third, of about US$1.6 billion, on 30 September 2025, bringing cumulative recoveries to 95% for US customers and 78% for international customers.⁵² A fourth, of about US$2.2 billion, was paid from 31 March 2026, taking cumulative recoveries to 100% for US customers and 96% for international customers.⁵³⁵⁴ By July 2026 the estate had distributed nearly US$10 billion, and a fifth round, of roughly US$900 million, was set to begin on 31 July.⁵⁴ The trust is also pursuing clawback suits, including one seeking about US$1 billion from Genesis Digital Assets.⁵⁵

Valuation disputes

Claims were valued in US dollars at the November 2022 petition date.⁴⁹⁵¹ Some creditors objected that they should instead receive crypto in kind, and that FTT should not be valued at zero. Dorsey overruled the objections, accepting testimony that the estate did not hold the assets needed to return crypto in kind or buy it at current prices.⁴⁹ Many creditors had expected to be repaid in crypto, and by March 2025 the price of bitcoin had more than quadrupled since the bankruptcy, so dollar repayments were worth less than the same holdings at market prices.⁵⁰

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See alsoReport an error

• Terra, whose collapse Zhao cited when announcing Binance's FTT sale

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