FTX

By late 2022 FTX was one of the largest and most trusted cryptocurrency exchanges anywhere. It had celebrity and sports endorsements, pitched itself to investors as the big exchange that got along with regulators, and its founder had testified before Congress. It was also quietly lending its customers' deposits to a hedge fund.

Sam Bankman-Fried started FTX in 2019, two years after he co-founded Alameda Research, a trading firm. FTX issued its own token, FTT, and Alameda held a huge amount of it. In November 2022 CoinDesk reported that Alameda's balance sheet showed a large position in FTT and other tokens tied to FTX. Confidence broke, a competitor said it would sell off its FTT, and customers rushed to get their money out. By the SEC's count they withdrew about $5 billion in a single day. FTX paused withdrawals on 8 November, because the money wasn't there. FTX had been routing customer deposits to Alameda through a credit line with effectively no limit. On 11 and 14 November 2022, FTX, Alameda, and about 100 affiliated companies filed for bankruptcy.

The customer shortfall was about $8 billion. Bankman-Fried was convicted on all seven counts against him, including fraud and conspiracy to launder money, in November 2023 and sentenced to 25 years in prison in March 2024. Several of his former executives cooperated with prosecutors and were sentenced separately in 2024.

Customers' claims were fixed in dollars as of 11 November 2022, when the estate's conversion table priced bitcoin at $16,871. John J. Ray III ran the bankruptcy as FTX's new chief executive, and once the repayment plan took effect in January 2025, the FTX Recovery Trust took over the payouts. In its report for the second quarter of 2026, the trust said that after a payout on 31 July 2026, every allowed customer claim had been paid, or had money set aside, at 100 percent or more of that dollar value. Bitcoin first traded above $90,000 in November 2024. So customers were made "whole" in dollars, but they didn't get their coins back or any of the later rise in price. With any custodian, you get back what they say you're owed, valued and paid on their terms rather than yours.

See Mt. Gox to FTX: The Custody Graveyard for the full decade of receipts.