FTX collapsed in November 2022 when CoinDesk revealed that Alameda Research held most assets in FTT token. A bank run followed. $8B in customer funds were missing. Sam Bankman-Fried was convicted in November 2023 and sentenced to 25 years in prison.
Lesson
“Customer funds are not operating capital. This is accounting 101, not a crypto insight. The collapse was a fraud problem, not a crypto problem.”
FAQ
Why did FTX collapse?
FTX collapsed because CEO Sam Bankman-Fried secretly used $8B in customer funds to cover losses at his trading firm Alameda Research. When exposed in November 2022, a bank run destroyed the exchange in 72 hours.
How much money did FTX lose?
FTX had an $8B hole in customer funds. Peak valuation was $32B. Venture investors lost approximately $1.8B.
Was Sam Bankman-Fried convicted?
Yes. Sam Bankman-Fried was convicted on all seven counts of fraud in November 2023 and sentenced to 25 years in prison.