FTX's collapse: A timeline of how the crypto giant imploded
Once one of the largest cryptocurrency exchanges in the world before its monumental collapse two years ago, FTX said this week that nearly all of its customers will receive the money back that they are owed.
FTX said in a court filing in the United States late on Tuesday that it owes about $11.2 billion (€10.4 billion) to its creditors.
The exchange estimates that it has between $14.5 billion (€13.5 billion) and $16.3 billion (€15.1 billion) to distribute to them.
How did we get to this point? Here is a timeline of what led up to this week’s announcement after an implosion at FTX kicked off what many had expected to become a “crypto winter”.
2022
November 2: Coindesk reports Alameda Reseach, Sam Bankman-Fried’s cryptocurrency trading firm, holds a large amount of FTT, a token issued by FTX, suggesting the finances of the two are intertwined and Alameda faces a cash crunch. The report spooks participants in the crypto market.
November 6: Rival cryptocurrency exchange Binance announces that the firm plans to sell all its holdings in FTT. The price of FTT tanks.
November 8: Binance founder and CEO Changpeng Zhao said his company had signed a letter of intent to buy FTX because the smaller exchange was experiencing a “significant liquidity crunch”. That deal would be contingent, however, on a look at the books at FTX.
The price for Bitcoin tumbles 13 per cent.
November 9: Cryptocurrency prices plunge and after getting a closer look at the finances of FTX, Binance retreated and said there would be no acquisition. “In the beginning, our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help,” Binance said in a statement.
Bitcoin prices drop another 14 per cent.
November 10: Crypto lender BlockFi announced it is “not able to do business as usual” and was pausing client withdrawals as a result of FTX’s implosion.
November 11: FTX files for Chapter 11 bankruptcy and Bankman-Fried resigns. John Ray III, a long-time bankruptcy litigator who is best known for having to clean up the mess made after the collapse of Enron, is named the new CEO.
In its bankruptcy filing, FTX listed more than 130 affiliated companies around the globe. The company valued its assets between $10 billion (€9.3 billion) to $50 billion (€46.5 billion), with a similar estimate for its liabilities. Bitcoin falls 10 per cent.
November 17: Ray gives a damning description of FTX’s operations under Bankman-Fried, from a lack of security controls to business funds being used to buy employees homes and luxuries.
November 30: As part of a media blitz, Bankman-Fried tells New York Time’s Andrew Ross-Sorkin, “Look, I screwed up,” and didn’t knowingly misuse clients’ funds.
FTX founder and CEO Sam Bankman-Fried leaves court. AP Photo/Seth Wenig, File
December 12: Bankman-Fried is arrested in the Bahamas, where FTX is headquartered.
December 13: The US government charges Bankman-Fried with a host of financial crimes, alleging he intentionally deceived customers and investors to enrich himself and others, while playing a central role in the company’s multibillion-dollar collapse.
Federal prosecutors said Bankman-Fried devised “a scheme and artifice to defraud” FTX’s customers and investors beginning the year it was founded.
He illegally diverted their money to cover expenses, debts and risky trades at Alameda Research, and to make lavish real estate purchases and large political donations, prosecutors said in a 13-page indictment.
December 22: Bankman-Fried’s parents agreed to sign a $250 million (€232.7 million) bond and keep him at their California home while he awaits trial.
2023
August 11: Judge revoked Bankman-Fried’s bail and sent him to jail after concluding he had repeatedly tried to influence witnesses against him.
October 3: Jury selection began for the trial.
October 27: Bankman-Fried took the stand in his trial. He again acknowledged failures but denied defrauding anyone.
November 3: Bankman-Fried is convicted of fraud for stealing at least $10 billion from customers and investors.
2024
March 28: Bankman-Fried is sentenced to 25 years in prison. Bitcoin has roared back from a massive sell-off during the scandal. Prices are up nearly 70 per cent.
April 30: Binance’s Zhao is sentenced to four months in prison for looking the other way as criminals used the platform to move money connected to child sex abuse, drug trafficking, and terrorism.
May 8: FTX says that nearly all of its customers will receive the money back that they are owed, two years after the cryptocurrency exchange imploded, and some will get more than that.