On November 11, 2022, FTX Trading Ltd. — along with Alameda Research and over 130 affiliated entities — filed for Chapter 11 bankruptcy in U.S. Bankruptcy Court. Founder Sam Bankman-Fried (SBF) resigned as CEO.
Timeline:
- November 2, 2022: CoinDesk reported that Alameda Research’s balance sheet was heavily composed of FTT (FTX’s own token)
- November 6, 2022: Binance CEO Changpeng Zhao announced Binance would sell its FTT holdings
- November 8, 2022: FTX halted customer withdrawals; Binance signed a non-binding letter of intent to acquire FTX
- November 9, 2022: Binance withdrew from the deal after reviewing FTX’s financials
- November 11, 2022: FTX filed for bankruptcy; SBF resigned
- December 12, 2022: SBF arrested in the Bahamas
- November 2, 2023: SBF convicted on all seven criminal counts
- March 28, 2024: SBF sentenced to 25 years in prison
Approximately $8 billion in customer funds had been misappropriated. Federal prosecutors called it “one of the biggest financial frauds in American history.” John J. Ray III, appointed as the new CEO to oversee bankruptcy proceedings, described it as the worst case of corporate governance failure he had ever seen — worse than Enron.
Once again, media declared cryptocurrency dead. Once again, Bitcoin’s protocol was unaffected. FTX was a centralized intermediary — the exact type of trusted third party that Bitcoin was designed to eliminate. The collapse reinforced the principle embedded in Bitcoin’s design: “Don’t trust, verify.”