On Nov. 11, 2022, then-FTX CEO Sam Bankman-Fried resigned, handing the company’s reins over to John Ray, who immediately filed for Chapter 11 bankruptcy protection in the United States. The day marked the beginning of the end of what was once one of the world’s most prominent and influential cryptocurrency exchanges.
US authorities charged Bankman-Fried and four of his associates with fraud. FTX users and creditors saw billions of dollars worth of funds locked out of their reach in an exchange they weren’t sure would ever be able to repay them. Ray reported that the firm represented an “utter failure of corporate controls at every level of an organization,” later comparing its operations to a “dumpster fire.”
In addition to FTX’s impact on millions of users and its employees, many lawmakers and business leaders often seemed to use the exchange as a punchline when discussing crypto, having it represent one of the most egregious examples of illicit practices. The company declared bankruptcy amid a crypto market downturn that turned a lot of public opinion away from the industry as token prices crashed and many firms filed for Chapter 11.
Exactly two years after that fateful day at FTX, the price of Bitcoin (BTC) has risen to an all-time high of more than $87,000. The US is still reeling from the results of an election in which many candidates were supported by crypto political action committees who sought to oust lawmakers working against their interests, spending roughly $134 million.
Prison time and repayments for customers
There have also been consequences for Bankman-Fried and his crew. The former FTX CEO was convicted of seven felony counts and sentenced to 25 years in prison, though his legal team has filed an appeal.
Out of the other former FTX and Alameda Research executives who pleaded guilty to charges, only one — engineering director Nishad Singh — was sentenced to time served for his role in the misuse of customer funds. Others, including Caroline Ellison and Ryan Salame, are expected to serve years behind bars. Gary Wang, one of the exchange’s co-founders, is scheduled to be sentenced on Nov. 20.
Related: FTX bankruptcy estate files $1.8B lawsuit against Binance, CZ
In bankruptcy court, a federal judge approved a reorganization plan in October that could allow FTX’s debtors to repay 98% of users roughly 119% of their claimed account value. The scheme would reimburse the exchange’s customers for the value of their digital assets at the time of bankruptcy and not consider gains to the price of BTC and other tokens.
FTX’s estate is still going after funds allegedly misappropriated by Bankman-Fried and others in political contributions, locked in accounts by other exchanges, and through investment deals with firms like SkyBridge Capital. Former Alameda co-founder Sam Trabucco was forced to surrender $70 million, properties, and a yacht to the estate as part of a settlement with the debtors.
Magazine: Can you trust crypto exchanges after the collapse of FTX?
