What happened to FTX?

FTX was one of the world's largest crypto exchanges until it collapsed in November 2022. Billions of dollars of customer money had been moved to a trading firm owned by its founder, Sam Bankman-Fried. When customers rushed to withdraw, the money was not there.

What was FTX?

Bankman-Fried founded FTX in 2019 and ran it from the Bahamas. It was a crypto exchange, a company where customers deposit money and coins in order to trade. Investors valued it at $32 billion in early 2022.

Bankman-Fried also owned Alameda Research, a firm that traded crypto for its own profit. The two were presented as separate businesses.

How did it collapse?

1. On November 2, 2022, the news site CoinDesk reported that much of Alameda's balance sheet consisted of FTT, a token created by FTX itself.
2. On November 6, the head of rival exchange Binance said it would sell its FTT holdings. FTX customers began pulling their funds.
3. On November 8, FTX stopped processing withdrawals. Binance announced a rescue deal, then walked away from it the next day.
4. On November 11, FTX filed for bankruptcy in the United States and Bankman-Fried resigned.

What did the courts find?

Bankman-Fried was arrested in the Bahamas in December 2022. On November 2, 2023, a New York jury convicted him on seven counts of fraud, conspiracy and money laundering. Three former senior colleagues had pleaded guilty and testified against him.

The Justice Department said he took more than $8 billion of customers' money. It said deposits were channeled to Alameda and used for investments, political donations and real estate. On March 28, 2024, he was sentenced to 25 years in prison and ordered to forfeit $11 billion.

On June 12, 2026, a federal appeals court in New York upheld the conviction and sentence. In September 2026, his lawyers asked the Supreme Court to hear the case, and news reports at the time said he had also applied for a presidential pardon. As of early October 2026, no decision on either had been reported.

Did customers get their money back?

Largely, in dollar terms. A repayment plan took effect in January 2025. In July 2026, the FTX estate said customer classes would reach 105% of their approved claims with its fifth round of payments.

There is a catch that many customers objected to. Claims were valued at crypto prices on the day of the bankruptcy filing, when the market was depressed. People who had held bitcoin on FTX received its November 2022 dollar value, not the coins, and missed the later recovery in prices.

The episode is the most cited example of platform risk. Coins on an exchange are a claim on that company, a point explained in custodial vs non-custodial wallets. An exchange account is also not insured like a bank account, as is crypto insured sets out.