FTX

On November 9, 2022, Caroline Ellison gathered Alameda Research's staff in its Hong Kong office. About 15 sat in person, most of them on a semi-circular couch, with Ellison opposite on a bean bag, Business Insider later reported; nearly all of the rest of the 30-person firm joined remotely. Alameda, she told them, was using customer deposits from its sister exchange, FTX, to repay its loans, a former engineer later testified. Asked who had decided that, she answered, according to Reuters: "Sam ... I guess."

A colleague sitting to her left secretly recorded it, the same report said.

Sam Bankman-Fried had co-founded FTX in 2019. On January 31, 2022, the exchange announced a $400 million Series C at a valuation of $32 billion, with participation from Temasek, SoftBank's Vision Fund 2 and Tiger Global; it was the third raise in six months, the company said, bringing the total to $1.8 billion. Less than two weeks later FTX's Super Bowl ad had Larry David reject the exchange: "Nah, I don't think so," he says. "And I'm never wrong about this stuff. Never."

On November 2, 2022, CoinDesk published a version of Alameda's balance sheet, showing $14.6 billion of assets as of June 30, the largest of them $3.66 billion of FTX's own token. Customers rushed to withdraw. Binance announced a non-binding deal to buy FTX on November 8 and walked away the next day. At about 4:30 a.m. on November 11, after further consultation with his lawyers, Bankman-Fried "ultimately agreed to resign," according to the declaration of his successor, and FTX filed for Chapter 11 in Delaware.

That successor, John J. Ray III, approximated the group's cash at the petition date at $564 million, much of it restricted or held by non-debtor entities. Payment requests had been approved by supervisors "responding with personalized emojis," he wrote in the declaration.

"Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here," Ray wrote.

A jury convicted Bankman-Fried on November 2, 2023, on all seven counts, including wire fraud and conspiracy. "He knew it was wrong. He knew it was criminal," Judge Lewis Kaplan said on March 28, 2024, sentencing him to 25 years and ordering about $11 billion forfeited. Ellison, Gary Wang and Nishad Singh had pleaded guilty and testified against him.

When the plan was confirmed in October 2024, FTX estimated it would have enough to pay customers at least 118% of the value of their accounts as of November 2022, Reuters reported. The Second Circuit affirmed the conviction on June 12, 2026, calling the evidence "conservatively stated, robust." Bankman-Fried petitioned the Supreme Court on September 10, 2026. At trial, the appeals court noted, he had testified that he did not "defraud anyone," and had explained a tweet, "FTX is fine. Assets are fine," by saying that Alameda still had a net asset value of "roughly positive 10 billion."

Sources for this story