Failure pattern · Bahamas · 2019–2024
FTX: a $32 billion crypto exchange gone in a week
Sam Bankman-Fried's FTX secretly moved customer deposits to his trading firm. When a news report triggered withdrawals, about $8 billion was missing and the company collapsed within days.
By Shivam Bhandari · Reviewed 31 October 2026 · How we write
by the numbers
- Peak valuation (January 2022)
- about $32 billion
- Missing customer funds
- about $8 billion
- Report to bankruptcy
- about 9 days
- Founder's sentence
- 25 years
What happened
Sam Bankman-Fried founded FTX in 2019, alongside his trading firm Alameda Research. FTX grew rapidly, bought stadium naming rights and a Super Bowl ad, and was valued at about $32 billion in early 2022. Bankman-Fried was presented as a responsible face of crypto.
On 2 November 2022 CoinDesk reported that Alameda's balance sheet was largely made up of FTT, a token FTX itself created. Days later Binance's CEO said he would sell his FTT holdings. Customers rushed to withdraw billions of dollars, and FTX couldn't pay — customer funds had been used by Alameda.
FTX filed for bankruptcy on 11 November 2022. Its new CEO, who had overseen Enron's liquidation, said he had never seen such a complete failure of corporate controls. Bankman-Fried was convicted of fraud in 2023 and sentenced to 25 years in prison.
Timeline
- 2019
FTX founded.
- 2022
Valued at $32B (January); CoinDesk report and collapse (November).
- 2023
Bankman-Fried convicted.
- 2024
Sentenced to 25 years.
what went wrong
- Customer money mixed with a related trading firm.
- No independent board, finance team, or controls.
- Value propped up by a self-issued token.
- Celebrity marketing created false confidence.
the lesson
A business that holds other people's money needs strict separation and controls; without them, one rumour can end it.
Apply it to your business
- 1Never mix customer funds with operating money.
- 2Independent oversight protects everyone, including founders.
- 3Ask what backs an asset's value.
Laws at work in this story
Figures are rounded and drawn from public reports, company filings and widely cited coverage at the time. Check the company's latest filings before relying on any number.