Skip to main content
Sign in

FTX

avoid.net/ftx→2/100·97% conf.
[AI-DRAFTED · AWAITING VERIFICATION][src:defillama]

Summary

FTX was a Bahamas-headquartered cryptocurrency exchange founded in May 2019 by Sam Bankman-Fried and Gary Wang that grew to a peak valuation of $32 billion before collapsing in November 2022 amid revelations that customer funds had been systematically misappropriated and funneled to affiliated trading firm Alameda Research. The collapse, one of the largest financial frauds in U.S. history, resulted in an estimated $8 billion shortfall in customer deposits, a Chapter 11 bankruptcy filing covering more than 130 affiliated entities, and criminal convictions for multiple executives including a 25-year prison sentence for founder Sam Bankman-Fried. Recovery proceedings under successor CEO John Ray III have since distributed more than $10 billion to creditors, with 98% of creditors slated to receive 119% of their November 2022 claim values.

On-Chain Risk Signals

via GoPlus Security
Ethereum0x5032…7AB5as of 4/28/2026
Token Security
90/100VERY LOW
  • Token can be minted
  • Contract is open-source
  • Listed on a DEX
Address Security
100/100VERY LOW

No signals reported.

Machine-generated risk signals from GoPlus Security. Findings are point-in-time snapshots and can change. Reviewed by an editor before publication; re-fetched weekly.

Have evidence about FTX?

No evidence submitted yet — be the first.

On-chain audit

Editorial decisions, corrections, and updates are anchored on Solana.

audit log →version history →

Background and History

FTX — an abbreviation of 'Futures Exchange' — was founded in May 2019 by Samuel Bankman-Fried (known publicly as 'SBF') and Zixiao 'Gary' Wang. The exchange was incubated within Alameda Research, a crypto trading firm Bankman-Fried had co-founded in 2017 alongside Caroline Ellison and former Jane Street colleagues. FTX's initial headquarters were in Hong Kong; the company relocated to Nassau, The Bahamas in September 2021, a jurisdiction chosen in part for its regulatory environment. Binance CEO Changpeng Zhao ('CZ') purchased a roughly 20% equity stake for approximately $100 million within months of launch, a stake later bought back by FTX in 2021 for approximately $2.1 billion in BUSD and FTT tokens. In July 2021, FTX raised $900 million at an $18 billion valuation from more than 60 investors including SoftBank and Sequoia Capital. In January 2022 it raised a further $400 million in Series C funding at a $32 billion valuation. At its peak FTX was among the largest crypto derivatives exchanges in the world, processing tens of billions of dollars in daily volume. The exchange's key executives included co-founder and CTO Gary Wang; Alameda Research CEO Caroline Ellison (also Bankman-Fried's former romantic partner); Director of Engineering Nishad Singh; and co-CEO of FTX Digital Markets Ryan Salame.

Sources

The Collapse — November 2022

The collapse of FTX unfolded over approximately ten days in November 2022. On November 2, 2022, CoinDesk published a report revealing that Alameda Research held approximately $3.66 billion in FTT tokens — FTX's own exchange token — as a primary balance sheet asset, alongside roughly $2.16 billion in 'FTT collateral.' The balance sheet showed $9 billion in liabilities against a severely illiquid asset base. Because FTX and Alameda were supposed to be separate companies, the report raised immediate alarm about the true financial relationship between the two entities. On November 6, Binance CEO Changpeng Zhao announced via Twitter that Binance would liquidate its remaining FTT holdings — approximately 23 million tokens worth roughly $529 million — citing 'recent revelations.' The announcement triggered panic withdrawals. Over the following three days, approximately $6 billion was withdrawn from FTX in a classic bank run. FTT's price fell approximately 80%, wiping more than $2 billion in market value within a single day. On November 8, Zhao briefly announced a non-binding letter of intent for Binance to acquire FTX; within 24 hours, after reviewing FTX's books, Binance withdrew from the deal. On November 11, 2022, FTX Trading Ltd., FTX US, Alameda Research, and approximately 130 affiliated entities filed for Chapter 11 bankruptcy protection in the United States, simultaneously with Bankman-Fried's resignation as CEO. The bankruptcy filing exposed an $8 billion shortfall in customer funds.

Sources

Alameda Research Connection and Misuse of Customer Funds

Central to the FTX fraud was the secret financial relationship between FTX and Alameda Research. Although FTX publicly represented that customer assets were held in segregated custody and separate from the exchange's own assets, prosecutors and regulators found that customer funds were routinely transferred to Alameda for use in trading, investments, loans, and personal expenditures of executives. Gary Wang testified at trial that Alameda had been accessing FTX customer funds as early as 2019 — the year FTX was founded. FTX's codebase contained a feature known internally as 'Allow Negative,' which permitted Alameda's accounts to carry a negative balance of up to $65 billion, effectively giving Alameda an unlimited line of credit funded by FTX customer deposits. This feature was never activated for any other user. Normal FTX users were subject to automatic liquidation when their balances fell below zero; Alameda was not. In spring 2022, a team of engineers at FTX subsidiary LedgerX discovered the backdoor code while evaluating whether FTX's international exchange codebase could be applied to a U.S.-regulated entity. An employee flagged it internally; the team leader who raised the concern was fired within months. Alameda used customer funds to purchase real estate, make venture investments, fund political donations, extend personal loans to executives, and offset trading losses. The CFTC's August 2024 consent order found that FTX and Alameda had made material misrepresentations to customers about the safety of their assets throughout the exchange's existence.

Sources

FTT Token — Role in the Fraud and Collapse

FTX launched its proprietary exchange token, FTT, in 2019. The token granted holders discounts on trading fees and other exchange benefits. FTX and Alameda collectively held the vast majority of FTT in circulation, making the token highly illiquid and its price easily susceptible to manipulation through artificial demand. FTT functioned as a core component of Alameda's alleged balance sheet — the token's inflated paper value masked the true insolvency of both FTX and Alameda. Alameda used FTT as collateral for loans, and FTX used FTT as an internal accounting asset. When CoinDesk's November 2, 2022 report revealed that Alameda's balance sheet was heavily concentrated in FTT, and Binance subsequently announced it would liquidate its FTT holdings, the circular nature of this arrangement became apparent to the market. The FTT price collapsed approximately 80% within days, triggering margin calls, withdrawal panic, and the exposure of the underlying $8 billion customer fund shortfall. FTT's role illustrates how self-issued exchange tokens with concentrated insider ownership can serve as instruments of fraudulent financial window-dressing.

Sources

Fraud and Criminal Charges

On December 12, 2022, the U.S. Department of Justice charged Sam Bankman-Fried with wire fraud, conspiracy to commit wire fraud, securities fraud, commodities fraud, money laundering, and campaign finance violations. He was arrested in Nassau, Bahamas the same day. After a ten-day detention at Fox Hill Prison in Nassau, Bankman-Fried consented to extradition and was transferred to U.S. custody on December 21, 2022. His trial began October 3, 2023 in the Southern District of New York before Judge Lewis Kaplan. On November 2, 2023, a jury found Bankman-Fried guilty on all seven criminal counts. On March 28, 2024, he was sentenced to 25 years in federal prison and ordered to forfeit $11.02 billion. Under First Step Act provisions, he may serve approximately 18 years. Bankman-Fried filed an appeal in April 2024 and sought a new trial in September 2024 alleging judicial bias; both efforts remained pending as of mid-2026. Prosecutors alleged that Bankman-Fried directed the misappropriation of customer deposits to fund Alameda's trading losses, personal loans to insiders totaling hundreds of millions of dollars, venture investments, and more than $100 million in political donations — many made through straw donors in violation of campaign finance law. The DOJ also filed a parallel indictment against Bankman-Fried citing additional charges including conspiracy to commit bank fraud and illegal straw donations, totaling an eight-count superseding indictment. Ryan Salame, FTX's co-CEO of Digital Markets, pleaded guilty in September 2023 to conspiracy to make unlawful political contributions and conspiracy to operate an unlicensed money transmitting business. He was sentenced to 7.5 years in prison in May 2024.

Sources

Co-Conspirator Plea Deals

Three key FTX insiders pleaded guilty and cooperated with prosecutors, providing critical testimony that led to Bankman-Fried's conviction. Gary Wang, FTX co-founder and CTO, pleaded guilty in December 2022 to conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodities fraud, and conspiracy to commit securities fraud. Wang received no prison time in recognition of his cooperation. Caroline Ellison, CEO of Alameda Research and Bankman-Fried's former romantic partner, pleaded guilty in December 2022 to seven counts including wire fraud, securities fraud, and money laundering conspiracy. She was sentenced on September 24, 2024 to two years in federal prison and ordered to forfeit $11 billion. She served approximately 14 months and was released in January 2026. Nishad Singh, FTX's Director of Engineering, pleaded guilty in February 2023 to fraud and campaign finance violations. He received no prison time. All three testified against Bankman-Fried at trial, providing direct evidence about the deliberate nature of the fraud and their own roles in its execution. The SEC additionally filed parallel civil charges against all three individuals. Ryan Salame, while not a cooperating witness, also pleaded guilty and received a 7.5-year sentence.

Sources

Campaign Finance Violations

Federal prosecutors alleged that Bankman-Fried used more than $100 million in stolen FTX customer funds to make political donations in the run-up to the 2022 U.S. midterm elections. The donations were made via a straw donor scheme, with FTX executives including Nishad Singh directed to make contributions under their own names to mask the true source and scale of the spending. Singh made approximately $9.7 million in donations to Democratic candidates and causes at Bankman-Fried's direction. According to CBS News, Bankman-Fried donated more than $40 million in the 2022 election cycle, making him one of the most significant donors in those midterms. Separately, Bankman-Fried allegedly made comparable donations to Republican-aligned causes through less public channels, with the intent to purchase bipartisan political influence. U.S. Attorney Damian Williams stated: 'All this dirty money was used in service of Bankman-Fried's desire to buy bipartisan influence and impact the direction of public policy.' Ryan Salame made tens of millions of dollars in unlawful political contributions and pleaded guilty to related conspiracy charges.

Sources

Regulatory Actions

The DOJ, SEC, and CFTC filed parallel criminal and civil actions against FTX, Alameda, and their executives. The CFTC filed its civil enforcement action in December 2022. In August 2024, a federal court entered a consent order requiring FTX and Alameda to pay $12.7 billion in combined monetary relief — $8.7 billion in restitution and $4 billion in disgorgement. The CFTC described this as the largest recovery for victims and the largest monetary sanction in its history. The order found that FTX falsely marketed itself as 'the safest and easiest way to buy and sell crypto' while systematically commingling and misappropriating customer funds. The SEC filed charges against Bankman-Fried, Ellison, Wang, and Singh for securities fraud violations. Congressional response was rapid: the Senate Banking Committee held a hearing titled 'Crypto Crash: Why the FTX Bubble Burst and the Harm to Consumers' on December 13, 2022; the Senate Agriculture Committee held a parallel hearing on December 1, 2022. John Ray III, the newly appointed CEO, provided extensive testimony to Congress. FTX's collapse accelerated legislative discussion around crypto-specific regulation, including renewed debate over the Digital Commodities Consumer Protection Act (DCCPA) and the delineation of SEC vs. CFTC jurisdiction over digital assets.

Sources

Victim Impact and Customer Losses

At the time of bankruptcy, FTX owed funds to more than one million customers and counterparties. The initial estimated shortfall in customer funds was approximately $8 billion. The top 50 creditors alone were owed approximately $3.1 billion. Customers included retail traders, institutional investors, and other cryptocurrency businesses. Because FTX did not maintain proper segregation of customer assets, many customers found their funds frozen immediately upon the exchange's collapse, with no ability to withdraw. The exchange's bankruptcy filing was filed under Chapter 11, covering FTX Trading Ltd. (the international exchange), FTX US, Alameda Research, and over 130 affiliated entities simultaneously. A key source of controversy in the recovery process has been that creditor claims were denominated at November 2022 cryptocurrency prices — significantly lower than prices prevailing in 2024 and 2025 — meaning customers whose assets were in Bitcoin, Ether, or other tokens that subsequently appreciated would receive the dollar value of those assets at the time of collapse, not their current market value.

Sources

Recovery Efforts and Bankruptcy Proceedings

Upon Bankman-Fried's resignation on November 11, 2022, John J. Ray III was appointed CEO of the FTX bankruptcy estate. Ray, who previously oversaw the Enron creditor recovery process, described the situation as among the worst he had seen in his career, citing a complete absence of trustworthy financial information, undocumented transactions, and a dramatic lack of corporate controls. When his team arrived, the exchange had only 105 Bitcoin remaining in its coffers, compared with nearly 100,000 Bitcoin owed to customers. Over the following two years, Ray's team recovered over $15 billion in assets, including the sale of FTX's equity stake in AI company Anthropic and positions in Robinhood. In October 2024, the Delaware bankruptcy court approved FTX's reorganization plan, calling the proceedings a 'model case' for a complex Chapter 11 bankruptcy. The plan provides 98% of creditors with 119% of their allowed November 2022 claim values plus interest of up to 9% per annum. Distributions began in February 2025. By late 2025 and early 2026, the estate had distributed approximately $10 billion across three payout rounds: $454 million in February 2025, $5 billion in May 2025, $1.6 billion in September 2025, and $2.2 billion beginning March 2026. Ray and his consulting firm Owl Hill Advisory LLC were approved for up to $41 million in fees including a $38 million incentive payment.

Sources

Red Flags and Warning Signs

Multiple warning signs preceded FTX's collapse, many of which were available to investors and users. First, FTX's close relationship with Alameda Research — both entities were founded and controlled by Bankman-Fried — created obvious conflicts of interest that were never adequately disclosed. Second, FTX's native token, FTT, was primarily held by insiders, making it illiquid and prone to price manipulation; its role as a core Alameda balance sheet asset represented a circular financial arrangement. Third, in spring 2022, internal FTX engineers raised concerns about Alameda receiving special code-level privileges, concerns that were suppressed and followed by the termination of the engineer who escalated them. Fourth, according to Time Magazine, effective altruism leaders were warned about Bankman-Fried's management ethics and alleged dishonesty as early as 2018 and 2019 by multiple Alameda employees who had left the firm; these concerns were not acted upon. Fifth, FTX had no independent board, no functioning audit committee, and maintained books and records in a condition that John Ray III described as an almost complete absence of trustworthy financial information. Sixth, FTX moved its headquarters to the Bahamas, a jurisdiction with lighter financial regulation than the U.S. Seventh, the exchange made substantial political donations and cultivated close relationships with regulators and legislators, raising questions about whether these relationships were intended to forestall regulatory scrutiny. Eighth, SBF's public persona — frugal, philanthropic, 'earning to give' under effective altruism principles — contrasted with evidence of a $40 million luxury penthouse and substantial personal expenditures funded from customer assets.

Sources

Timeline

2017-01-01

Sam Bankman-Fried and colleagues from Jane Street found Alameda Research, a crypto quantitative trading firm, in Berkeley, California.

2019-05-01

FTX exchange founded by Sam Bankman-Fried and Gary Wang. The exchange is incubated within Alameda Research. Alameda begins accessing FTX customer funds, per later trial testimony.

2019-07-01

FTT token launches as FTX's proprietary exchange token, with the majority of supply held by FTX and Alameda insiders.

2019-12-01

Binance acquires approximately 20% equity stake in FTX for roughly $100 million.

2021-07-20

FTX raises $900 million at an $18 billion valuation from more than 60 investors including SoftBank and Sequoia Capital.

2021-09-01

FTX moves headquarters from Hong Kong to Nassau, The Bahamas.

2021-10-01

FTX buys back Binance's equity stake for approximately $2.1 billion in BUSD and FTT tokens.

2022-01-14

FTX raises $400 million in Series C funding at a $32 billion valuation. Announces FTX Ventures with a $2 billion fund.

2022-05-01

LedgerX engineers discover code giving Alameda special privileges — including the 'Allow Negative' backdoor — and raise concerns internally. The engineer who escalated the issue is later fired.

2022-11-02

CoinDesk publishes a report revealing Alameda Research's balance sheet is heavily concentrated in FTT tokens, exposing the financial entanglement between FTX and Alameda.

2022-11-06

Binance CEO Changpeng Zhao announces on Twitter that Binance will liquidate its FTT holdings due to 'recent revelations,' triggering a market panic.

2022-11-08

Binance signs a non-binding letter of intent to acquire FTX. FTT price collapses approximately 80%, wiping more than $2 billion in value. FTX experiences an estimated $6 billion bank run.

2022-11-09

Binance withdraws from the FTX acquisition after reviewing FTX's books, citing mishandled customer funds and regulatory investigations.

2022-11-11

FTX Trading Ltd., FTX US, Alameda Research, and approximately 130 affiliated entities file for Chapter 11 bankruptcy. Sam Bankman-Fried resigns as CEO. John J. Ray III is appointed CEO.

2022-12-01

U.S. Senate Agriculture Committee holds a hearing, 'Why Congress Needs to Act: Lessons Learned From the FTX Collapse,' featuring CFTC Chairman Rostin Behnam.

2022-12-12

Sam Bankman-Fried arrested in Nassau, Bahamas by Royal Bahamas Police Force. DOJ, SEC, and CFTC file parallel criminal and civil charges.

2022-12-13

John J. Ray III testifies before the U.S. House Financial Services Committee, describing 'a complete failure of corporate controls' at FTX.

2022-12-21

Sam Bankman-Fried extradited to the United States after consenting to extradition.

2022-12-22

Gary Wang and Caroline Ellison plead guilty to multiple fraud-related charges and agree to cooperate with prosecutors.

2023-02-01

Nishad Singh pleads guilty to fraud and campaign finance violations, agrees to cooperate with prosecutors.

2023-09-01

Ryan Salame pleads guilty to conspiracy to make unlawful political contributions and operating an unlicensed money transmitting business.

2023-10-03

Trial of Sam Bankman-Fried begins in the Southern District of New York before Judge Lewis Kaplan.

2023-11-02

Jury finds Sam Bankman-Fried guilty on all seven criminal counts.

2024-03-28

Sam Bankman-Fried sentenced to 25 years in federal prison and ordered to forfeit $11.02 billion.

2024-04-11

Sam Bankman-Fried files an appeal of his conviction and sentence.

2024-05-28

Ryan Salame sentenced to 7.5 years in federal prison.

2024-08-01

CFTC obtains $12.7 billion consent judgment against FTX and Alameda Research — the largest monetary sanction in CFTC history.

2024-09-24

Caroline Ellison sentenced to two years in federal prison and ordered to forfeit $11 billion.

2024-10-07

Delaware bankruptcy court approves FTX's reorganization plan, providing 98% of creditors with 119% of their November 2022 claim values plus interest.

2025-02-18

First distribution to FTX creditors begins: approximately $454 million paid out.

2025-05-30

Second creditor distribution of approximately $5 billion.

2025-09-30

Third creditor distribution of approximately $1.6 billion. Cumulative distributions reach approximately $7.1 billion.

2026-01-01

Caroline Ellison released from federal custody after serving approximately 14 months.

2026-03-31

Fourth creditor distribution of approximately $2.2 billion commences. Cumulative distributions exceed $10 billion.

Research Gaps

4 open · agent-resolvable

Heuristic next-actions surfaced for researchers and worker agents. Resolving these strengthens the page's evidence base and trust score.

  • [high]
    no addresses

    No on-chain addresses cited. Pull tx receipts or contracts from the source URLs and surface explorer links.

  • [med]
    no regulatory

    No regulatory or sanctions cross-check. Run OFAC SDN, SEC EDGAR, and CFTC enforcement-action lookups for this entity.

  • [med]
    single source

    Only one source has reported on this entity. Search Telegram (ZachXBT), other connectors, and news for corroborating coverage.

  • [med]
    unarchived sources

    Cited sources are not Wayback-archived. Run the archiver to pin their content before they rot.

Provenance
src:defillama

This investigation is cryptographically anchored to the Solana blockchain and source URLs are archived via the Internet Archive. Full audit log →

model: claude-code-investigator

generated: 4/17/2026, 4:23:04 PM

last updated: 5/8/2026, 2:42:01 AM

avoid.net — verified advice for a post-truth world