How $8 Billion Vanished: The Collapse of FTX Explained

https://www.indicrypto.com - Indian Cryptocurrency Analysis, Tools, Tutorials, Data and News On November 2, 2022, a leaked balance sheet exposed a problem that would bring one of crypto’s biggest empires crashing down. FTX had gone from a fast-growing cryptocurrency exchange to a global powerhouse backed by major investors, celebrity endorsements, a Super Bowl commercial, and its billionaire founder Sam Bankman-Fried. But beneath the image of success, billions of dollars were tied to FTT — a token created by FTX itself and heavily held by Bankman-Fried’s trading firm, Alameda Research. When Binance announced it would sell its FTT holdings, panic spread almost immediately. Customers rushed to withdraw their money from FTX, with withdrawal requests exceeding **$5 billion in a single day**. A proposed Binance rescue deal briefly appeared to offer an escape — until Binance examined FTX's internal finances and walked away. What investigators uncovered was far worse. Billions of dollars in customer deposits had been transferred to Alameda Research and used for risky trading, real estate purchases, and loans to executives. The supposed separation between FTX and Alameda had effectively collapsed, revealing a shared financial system built on customer money and extremely weak corporate controls. On November 11, 2022, FTX and more than 100 affiliated companies filed for bankruptcy. The collapse eventually led to the arrest and extradition of Sam Bankman-Fried, testimony from Alameda CEO Caroline Ellison, a criminal trial in New York, and a conviction on all seven counts against him. In March 2024, Bankman-Fried was sentenced to **25 years in federal prison**. But the story didn't end with the conviction. Bankruptcy lawyers spent years recovering assets from investments, real estate, venture funds, and political organizations, while FTX customers fought to recover their funds. The FTT token — the asset at the center of the crisis — never returned to anything close to