Sam Bankman-Fried and the FTX Collapse: How It Fell in 9 Days

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On Nov. 2, 2022, CoinDesk published a single document: the balance sheet of Alameda Research, Sam Bankman-Fried’s trading fund. Nine days later, the crypto exchange FTX, valued at $32 billion in January, filed for bankruptcy. The company’s new CEO, who had earlier cleaned up after Enron, told the court he had never seen such a complete failure of corporate controls in his career. This is the most extreme case in this series, which is exactly why it is worth knowing: it shows what is left of a company when nobody sits above the CEO.

Nine Days: The FTX Collapse Timeline

The balance sheet CoinDesk obtained showed that the largest asset on Alameda’s books, worth $14.6 billion, was FTT, a token issued by the FTX exchange itself. The fund and the exchange, formally two companies owned by the same founder, rested on value that to a large extent they had printed themselves.

• Nov. 6. Changpeng Zhao, head of the rival exchange Binance, announces that his company will sell the FTT tokens it holds. Customers start pulling out their money. According to Reuters, they withdrew about $6 billion within 72 hours.
• Nov. 8. Binance and Bankman-Fried announce a nonbinding letter of intent for Binance to acquire FTX. Overnight between Nov. 8 and 9, FTX stops processing withdrawals.
• Nov. 9-10. Binance backs out, citing the results of its review of the books and press reports. Sequoia Capital tells its investors that it is marking its $214 million investment in FTX down to zero.
• Nov. 11. FTX, Alameda and more than 100 affiliated companies file for bankruptcy in Delaware. Bankman-Fried stops being CEO. He is replaced by John J. Ray III, a restructuring specialist.

What the New Management Found

Ray’s first declaration to the court, dated Nov. 17, 2022, reads like a list of everything the company did not have. Ray wrote that in his career he had never seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information. According to Reuters and Axios accounts of the document, many companies in the group never held a board meeting, a full list of employees and bank accounts could not be established, and requests to pay out money were approved in a chat with emojis.

That answers the question of what FTX’s board did. Nothing, because in practice there was nobody who could do anything. Ray described the group as a set of silos controlled by Bankman-Fried, in which two of his associates held minority stakes. The investors who put money into FTX at a $32 billion valuation, Sequoia among them, had no real oversight of the company. Sequoia later told its investors that taking risk is what it does.

There was no board that could remove the CEO. The CEO was removed by a bankruptcy court.

The Verdict and the Bill

Bankman-Fried was arrested in the Bahamas on Dec. 12, 2022, and handed over to the United States. His closest associates, including Alameda’s former chief Caroline Ellison, pleaded guilty and testified against him. On Nov. 2, 2023, exactly a year after the CoinDesk article, a jury in New York found him guilty on all seven counts. On March 28, 2024, Judge Lewis Kaplan sentenced him to 25 years in prison and forfeiture of about $11 billion. According to the judge, FTX customers lost $8 billion, investors $1.7 billion and Alameda’s lenders $1.3 billion.

The case is still going. On June 12, 2026, the federal appeals court for the Second Circuit upheld the sentence. In September 2026, Bankman-Fried filed a petition with the U.S. Supreme Court, which had not decided whether to hear it as of Nov. 12, 2026. He also filed a pardon request, with no public response.

FTX Valuation Before and After

The last row needs an explanation, because it looks like a happy ending. Customer claims are calculated in dollars at the prices on the day of the bankruptcy, that is, November 2022. Someone who held bitcoin on FTX gets back its value at that time, not today’s value. Investors who bought equity in the exchange itself did not get that kind of payout.

What FTX Teaches in the Context of Nvidia

To be clear: Nvidia is not FTX. Bankman-Fried was convicted of fraud, nobody has brought charges against Jensen Huang, and Nvidia is a public company with an audit, quarterly reports and a board made up, apart from him, entirely of independent directors. This case belongs in the series for a different reason: it is an extreme example that shows why boards exist in the first place.

FTX shows that when nobody sits above the CEO, a crisis of trust ends in days, not months, and that control passes not to a successor but to a court and an outside administrator. Nvidia had what FTX lacked: a board able to accept a CEO’s resignation and name an acting CEO in the same document. It also had something FTX would not have survived: money from real sales, with over $90 billion in revenue in a single quarter. That is why its share price fell by almost a quarter over fifteen days, and not to zero. I trace those days in the report Fifteen Days That Changed Nvidia.

Frequently Asked Questions

Why did the FTX exchange collapse?

After CoinDesk’s Nov. 2, 2022 article on Alameda’s balance sheet and Binance’s announcement that it would sell its FTT tokens, customers began withdrawing money en masse. FTX could not cover the withdrawals because, according to prosecutors and the verdict, customer funds had ended up at Alameda. On Nov. 11, 2022, the company filed for bankruptcy.

How long is Sam Bankman-Fried’s prison sentence?

On March 28, 2024, he was sentenced to 25 years in prison, with forfeiture of about $11 billion. The appeals court upheld the sentence on June 12, 2026.

Did FTX customers get their money back?

The bankruptcy plan confirmed on Oct. 7, 2024 provides that 98 percent of creditors will receive about 119 percent of their claims, but calculated at the prices on the bankruptcy date in November 2022.

Tech CEO Scandals: Tech CEO Scandals: Intel, OpenAI, Uber, WeWork, Theranos, FTX, Nvidia

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