What Happened to FTX Trading Ltd.?
FTX, once a leading cryptocurrency exchange valued at $32 billion, collapsed in November 2022 due to a massive fraud orchestrated by its founder, Sam Bankman-Fried. He illegally diverted billions in customer funds to his hedge fund, Alameda Research, leading to a liquidity crisis and bankruptcy. Bankman-Fried was convicted of fraud in 2023, sentenced to 25 years in prison in 2024, and his appeals were rejected in June 2026, while FTX's bankruptcy estate continues to recover and distribute funds to creditors.
Quick Answer
FTX, a prominent cryptocurrency exchange, collapsed in November 2022 after its founder, Sam Bankman-Fried, was found to have orchestrated a multi-billion dollar fraud, illegally siphoning customer funds to his affiliated trading firm, Alameda Research. This led to a severe liquidity crisis and FTX filing for bankruptcy. Bankman-Fried was convicted of fraud in November 2023, sentenced to 25 years in prison in March 2024, and his appeal was denied in June 2026. The FTX bankruptcy estate is currently in the process of recovering and distributing billions of dollars to affected creditors, with multiple payout rounds completed and more scheduled for 2026.
📊Key Facts
📅Complete Timeline15 events
FTX Trading Ltd. Founded
Sam Bankman-Fried (SBF) and Gary Wang co-found FTX, a cryptocurrency exchange specializing in derivatives and leveraged products.
FTX Reaches $18 Billion Valuation
FTX raises $900 million from over 60 investors, including Softbank and Sequoia Capital, pushing its valuation to $18 billion.
Valuation Peaks at $32 Billion
FTX's valuation reaches its peak of $32 billion after a Series C funding round, solidifying its position as a major crypto player.
CoinDesk Report Sparks Crisis
A CoinDesk report reveals that Alameda Research, SBF's trading firm, holds a significant amount of FTX's native token, FTT, raising concerns about financial stability and interdependencies.
Binance Sells FTT, Triggers Withdrawals
Binance CEO Changpeng Zhao announces the liquidation of all Binance's FTT holdings, leading to a massive wave of customer withdrawals from FTX and a severe liquidity crisis.
FTX Halts Withdrawals
Facing a critical liquidity shortage, FTX halts all customer withdrawals, effectively trapping billions of dollars in user funds.
FTX Files for Bankruptcy
FTX, Alameda Research, and over 100 affiliated entities file for Chapter 11 bankruptcy in the U.S. Sam Bankman-Fried resigns as CEO, replaced by John J. Ray III.
Sam Bankman-Fried Arrested
SBF is arrested in the Bahamas on U.S. charges, including wire fraud, securities fraud, and money laundering, and is later extradited.
SBF Convicted of Fraud
A federal jury convicts Sam Bankman-Fried on seven counts of fraud and conspiracy related to the misuse of FTX customer funds.
SBF Sentenced to 25 Years
Sam Bankman-Fried is sentenced to 25 years in prison and ordered to pay $11 billion in forfeiture for his role in the FTX fraud.
Bankruptcy Reorganization Plan Approved
A Delaware bankruptcy judge approves FTX's reorganization plan, which aims to repay 98% of creditors 119% of their allowed claims as of November 2022.
First Creditor Distributions Begin
FTX begins its first round of creditor distributions, returning approximately $1.2 billion, primarily to smaller claims.
Fourth Major Payout to Creditors
The FTX Recovery Trust commences its fourth major round of creditor distributions, valued at approximately $2.2 billion, bringing the total returned to nearly $10 billion.
SBF's Conviction and Sentence Upheld
A three-judge panel of the Second U.S. Circuit Court of Appeals rejects Sam Bankman-Fried's appeal, upholding his fraud conviction and 25-year prison sentence.
SBF Plans New Crypto Token from Prison
Reports indicate that Sam Bankman-Fried, currently incarcerated, has expressed intentions to launch a new crypto token upon his release, projected for around 2044.
🔍Deep Dive Analysis
FTX Trading Ltd., commonly known as FTX, was co-founded by Sam Bankman-Fried (SBF) and Gary Wang in 2019, rapidly ascending to become one of the world's largest cryptocurrency exchanges. By January 2022, FTX reached a peak valuation of $32 billion, attracting significant investment and celebrity endorsements. The company positioned itself as a secure and reliable platform for trading crypto derivatives and other digital assets.
The downfall began in November 2022 when a CoinDesk report revealed that Alameda Research, SBF's quantitative trading firm closely affiliated with FTX, held a substantial portion of its assets in FTT, FTX's proprietary token. This revelation sparked concerns about the intertwined finances and potential over-leverage, triggering a crisis of confidence. Binance, a rival exchange, announced it would liquidate its FTT holdings, leading to a massive wave of customer withdrawals from FTX. FTX faced an insurmountable liquidity crisis, unable to meet withdrawal demands, and subsequently halted customer withdrawals.
On November 11, 2022, FTX, Alameda Research, and over 100 affiliated entities filed for Chapter 11 bankruptcy, and Sam Bankman-Fried resigned as CEO, replaced by John J. Ray III, who famously oversaw the Enron bankruptcy. Investigations quickly uncovered a "complete failure of corporate controls" and the misappropriation of billions of dollars in customer funds. Prosecutors alleged that SBF orchestrated a scheme to divert FTX customer deposits to Alameda Research to cover its debts, make risky investments, lavish real estate purchases, and significant political donations.
Sam Bankman-Fried was arrested in the Bahamas in December 2022 and extradited to the U.S. Following a trial, he was convicted on seven counts of fraud and conspiracy in November 2023. In March 2024, SBF was sentenced to 25 years in prison and ordered to forfeit $11 billion, with prosecutors describing it as one of the largest financial frauds in U.S. history. Several key executives, including Caroline Ellison and Gary Wang, pleaded guilty and cooperated with prosecutors, testifying that SBF directed the fraudulent activities.
As of June 2026, the FTX bankruptcy proceedings are ongoing. The FTX bankruptcy estate has made significant progress in asset recovery, announcing that nearly all customers would receive their money back, and some even more. The estate approved a reorganization plan in October 2024, aiming to repay 98% of creditors 119% of their allowed claims. Multiple distribution rounds have occurred, with approximately $7.1 billion distributed by September 2025. A fourth distribution of $2.2 billion commenced on March 31, 2026, bringing total payouts to nearly $10 billion, and a fifth round is scheduled for May 29, 2026. Sam Bankman-Fried's legal battles continue, with a three-judge panel of the Second U.S. Circuit Court of Appeals upholding his conviction and 25-year sentence on June 12, 2026, rejecting his appeal. Despite being in prison, reports from June 2026 indicate SBF's intention to launch a new crypto token upon his release, which is currently projected for around 2044.
What If...?
Explore alternate histories. What if FTX Trading Ltd. made different choices?