Regulatory action

FTX Exchange Collapse

Second-largest global crypto exchange, valued at $32B months earlier, collapses in 9 days after CoinDesk reveals Alameda-FTX balance sheet irregularities. Founder SBF convicted on 7 fraud counts.

Losses

$8.0B

Affected

~1,000,000

Started

Nov 2022

Collapsed

Nov 2022

Timeline

2019-2022: FTX grows to second-largest global crypto exchange. Sam Bankman-Fried profiled as 'crypto wunderkind'

November 2, 2022: CoinDesk publishes internal Alameda Research balance sheet showing heavy FTT token holdings

November 6, 2022: Binance CEO CZ announces he will sell all FTT. Price collapses

November 8, 2022: Binance announces intent to acquire FTX, then backs out next day

November 10, 2022: FTX halts withdrawals

November 11, 2022: FTX files Chapter 11. SBF replaced by new CEO John Ray (previously the Enron bankruptcy trustee)

December 12, 2022: SBF arrested in the Bahamas

November 2, 2023: SBF convicted on 7 counts of fraud and conspiracy after month-long trial

March 28, 2024: SBF sentenced to 25 years in federal prison

Evidence

Verified via: US v Bankman-Fried verdict (2023), complete trial transcripts, bankruptcy court filings (Delaware), John Ray II's investigative report.

Lessons for you

'Effective altruism' branding and charitable donations provide no assurance about accounting integrity
Native exchange token (FTT) used as collateral for customer deposits is a structural Ponzi
Regulatory-friendly public posture can coexist with catastrophic internal fraud
Celebrity endorsements (Tom Brady, Gisele, Kevin O'Leary) are marketing, not diligence signals
Withdrawals halted = exchange insolvent, no exceptions