Billions in customer money spent on luxury — and a rare case where the system was finally held to account (FTX)

In just a few years, FTX transformed from a niche startup into one of the largest cryptocurrency exchanges in the world, and its founder into the face of a "responsible" crypto market: he testified before the US Congress, funded political campaigns and publicly called for tighter regulation of the industry. The company's collapse in November 2022 showed within days just how deceptive an image of reliability can be — and became a rare case in which accountability did, after all, catch up with the system.

Sam Bankman-Fried, the founder of FTX, publicly positioned himself as a voice for responsible regulation of the industry, and under his leadership the exchange attracted billions of dollars in investment from the world's largest venture funds. Behind this façade lay a scheme that radically contradicted the company's public image: Bankman-Fried secretly transferred billions of dollars of customer funds to the affiliated trading firm Alameda Research for risky investment operations, political donations and personal spending, including on real estate.

The collapse came swiftly: in November 2022, a leak of information about Alameda Research's balance sheet triggered panic among customers and a mass withdrawal of funds that FTX was unable to service. Within days the exchange halted payouts, and on 11 November 2022 it filed for bankruptcy.

In November 2023, Bankman-Fried was found guilty on seven counts of fraud and conspiracy. On 28 March 2024, the court sentenced him to 25 years in prison and ordered him to pay $11 billion in asset forfeiture. In 2025, an appeals court rejected his attempt to challenge the verdict; Bankman-Fried is serving his sentence at a low-security prison in California and will not be eligible for release before 2044.

The transparent and structured bankruptcy procedure in the US made it possible to organise the recovery of funds far more effectively than in most other comparable cases: thanks to the appreciation in asset values after the collapse, the bankruptcy administration was able to compensate customers for their original claims in full, and in some instances even with a surplus.

Published 1 March 2025