Bitcoin
FTX: A Timeline of the Cryptocurrency Exchange Collapse
FTX, once one of the world’s largest cryptocurrency exchanges, said this week that almost all of its customers will get back the money they are owed, two years after its monumental collapse.
FTX said in a court filing on Tuesday that it owes about $11.2 billion to its creditors. The exchange estimates it has between $14.5 billion and $16.3 billion to distribute to them.
Here’s a timeline of what led up to this week’s announcement, after an implosion at FTX kicked off what many expected would become a “crypto winter.”
2022
November 2: Coindesk reports that Bankman-Fried’s cryptocurrency trading firm Alameda Reseach holds a large amount of FTT, a token issued by FTX, hinting at the two’s finances are interconnected and Alameda faces a cash crisis. The report scares crypto market participants.
November 6: Rival cryptocurrency exchange Binance announces that the company plans to sell all of 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 crisis.” This deal would depend, however, on an analysis of FTX’s books. Bitcoin price drops 13%.
November 9: Cryptocurrency prices plummet and after taking a closer look at FTX’s financials, Binance backed down and said there would be no acquisition. “Initially, our hope was to be able to support FTX customers in providing liquidity, but the issues are beyond our control or ability to help,” Binance said in a statement. Bitcoin prices fall another 14%.
November 10: Cryptocurrency lender BlockFi announced that it is “unable to do business as usual” and has been pausing client withdrawals as a result of the FTX implosion.
November 11th: FTX Files for Chapter 11 and Bankman-Fried resigns. John Ray III, a longtime bankruptcy litigator who is best known for having to clean up the mess made after Enron’s collapse, is named the new CEO.
In its bankruptcy filing, FTX listed more than 130 affiliated companies around the world. The company valued its assets at between $10 billion and $50 billion, with a similar estimate for its liabilities. Bitcoin drops 10%.
November 17th: Ray gives a blunt description of FTX’s operations under Bankman-Fried, from the lack of security controls to the use of corporate funds to buy homes and luxuries for employees.
November 30: As part of a media campaign, Bankman-Fried said Andrew Ross-Sorkin of the New York Time“Look, I messed up,” and did not intentionally misuse customer funds.
December 12th: Bankman-Fried arrested in Bahamaswhere FTX is headquartered.
December 13th: The US government accuses Bankman-Fried of a series of financial crimesclaiming he intentionally misled customers and investors to enrich himself and others, while also playing a central role in the company’s multibillion-dollar collapse.
Federal prosecutors said Bankman-Fried devised “a scheme and ruse to defraud” FTX customers and investors early in the year it was founded. He illegally diverted their money to cover expenses, debts and risky deals at Alameda Research, and to make lavish real estate purchases and large political donations, prosecutors said in a 13-page indictment.
December 22nd: Bankman-Fried’s parents agreed to sign a $250 million bond and keep him at his California home while he awaits trial.
2023
August 11th: The judge revoked Bankman-Fried’s bail and sent him to prison after concluding, he repeatedly tried to influence witnesses against him.
October 3: Jury selection has begun for the trial.
October 27th: Bankman-Fried took the stand at his trial. He again acknowledged the failings 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 recovered from a massive sell-off during the scandal. Prices rose almost 70%.
April 30: Changpeng Zhao, the founder of Binance, is sentenced to four months in prison for looking away while criminals used the platform to move money related to child sexual abuse, drug trafficking and terrorism.
May 8: FTX states that almost all of its customers will get back the money owed to themtwo years after the cryptocurrency exchange implosion, and some will receive more than that.