#FTX

FTX was a centralized cryptocurrency exchange founded in 2019 by Sam Bankman-Fried and Gary Wang, headquartered in The Bahamas, that offered spot, derivatives, tokenized equities, and a separate U.S. arm (FTX.US). It collapsed in early November 2022 after a CoinDesk report exposed that the balance sheet of its sister trading firm, Alameda Research, was concentrated in illiquid FTT tokens issued by FTX itself. When Binance's CEO publicly announced plans to sell its FTT holdings, the resulting confidence crisis triggered an $8+ billion bank run that FTX could not meet because customer deposits had been silently routed to Alameda to cover leveraged trading losses. Within a week the company filed for Chapter 11 bankruptcy in Delaware, freezing more than a million customer accounts and exposing what U.S. prosecutors later described as one of the largest financial frauds in history.

FTX as a trading exchange no longer operates and never resumed deposits or withdrawals after the November 2022 freeze. The remaining corporate entity, often referred to as the FTX Recovery Trust or "new FTX," is run by court-appointed CEO John J. Ray III solely for the purpose of asset recovery, claim adjudication, and creditor distributions under U.S. bankruptcy supervision. Founder Sam Bankman-Fried was extradited from The Bahamas, tried in the Southern District of New York, and convicted in November 2023 on seven counts including wire fraud, securities fraud, and conspiracy to commit money laundering. He was sentenced in March 2024 to 25 years in U.S. federal prison and ordered to forfeit roughly $11 billion. Several former insiders — including Caroline Ellison, Gary Wang, and Nishad Singh — pleaded guilty earlier and cooperated with prosecutors.

Former FTX customers and creditors recover funds through the bankruptcy claims process, not through the old exchange interface. Eligible users had to file a Proof of Claim through the official claims portal operated by the appointed claims agent (Kroll) before the bar dates set by the Delaware bankruptcy court, with later supplemental windows for missed claims. Distributions are paid in U.S. dollars based on the petition-date value of each customer's assets as of November 11, 2022 — meaning crypto balances were converted at that date's price rather than current market prices. Under the court-approved reorganization plan, the FTX Recovery Trust began rolling distributions in 2024 and 2025, with the convenience class (smaller claims) paid earlier and larger claimants paid through agents such as BitGo, Kraken, and Payoneer. Customers who sold their claim to a secondary-market buyer receive nothing further; the assigned buyer collects the distribution instead.

FTT was the native utility token of the FTX exchange, originally launched in 2019 to give holders trading-fee discounts, staking rewards, and a share of buy-and-burn revenue from exchange profits. At its peak FTT traded above $80 with a multi-billion-dollar market cap, but its price collapsed by more than 90% in a few days during the November 2022 implosion once the token's role as collateral on Alameda's balance sheet became public. FTT still trades on several centralized and decentralized venues at a small fraction of its former value, and its price tends to react to bankruptcy headlines, distribution announcements, and speculation about a potential "FTX 2.0" relaunch — though the court-confirmed plan does not give FTT holders equity in any successor entity. Holding FTT today is widely viewed as a speculative position on residual brand value rather than a claim on the estate.

Alameda Research was the quantitative trading firm co-founded by Sam Bankman-Fried before FTX and was, in practice, the largest counterparty and liquidity provider on the FTX platform. Court filings and trial testimony showed that FTX granted Alameda a hidden, effectively unlimited line of credit and exempted it from the standard auto-liquidation engine that protected other traders. When Alameda took heavy losses during the 2022 crypto downturn — including exposure to the Terra/Luna collapse and the Three Arrows Capital fallout — FTX management secretly transferred customer deposits to Alameda to cover those losses and meet margin calls. Alameda's balance sheet was also heavily collateralized by FTT and Solana-ecosystem tokens issued or backed by FTX itself, creating a circular dependency that unraveled once market confidence broke. Former Alameda CEO Caroline Ellison pleaded guilty, cooperated with prosecutors, and received a 2-year sentence.