The Night FTX Vanished

What actually happened

The CoinDesk story revealed Alameda Research's assets were dominated by FTT, the token FTX itself issued. When rival exchange Binance announced it would dump its FTT holdings, the token's price collapsed, and with it the collateral propping up loans that had quietly been funded with customer deposits.

A run followed; withdrawals froze; a rescue acquisition by Binance died in a day of due diligence. FTX filed for bankruptcy on November 11. Bankman-Fried was convicted on seven fraud counts a year later. The industry's most trusted exchange had been prestige all the way down: congressional testimony, stadium naming rights, celebrity endorsements.

The customer money largely resurfaced through the bankruptcy estate's asset sales, but the exchange's legend didn't survive: the trust was the product, and it never trades again.

The longer arc

Sentencing came in March 2024: 25 years, roughly half of what prosecutors had asked for but still among the longest terms ever handed to a white-collar defendant. Caroline Ellison, the former Alameda Research CEO and Bankman-Fried's on-and-off girlfriend, and Gary Wang, FTX's co-founder, had both pleaded guilty earlier and testified against him for lighter sentences, becoming the government's central witnesses on how the fraud actually worked. Ellison, whose seven fabricated spreadsheets became a key trial exhibit, was sentenced to two years. Wang, credited with helping prosecutors trace the missing funds, got no additional prison time at all.

The bankruptcy estate later recovered enough, largely by selling FTX's remaining crypto and startup stakes as prices rebounded, to repay creditors based on the dollar value of their claims at the time of the November 2022 collapse. That produced headlines claiming customers were being made whole, even paid back with interest. The sentencing judge pushed back on that framing directly, calling the full-repayment claim misleading and logically flawed, since anyone who had kept holding crypto instead of a frozen claim would have made far more money over that same period.