The FTX Collapse (2022): A Timeline of What Happened and What Changed
FTX went from one of the biggest crypto exchanges to bankruptcy in about nine days in November 2022. Here is the documented timeline, trial outcome and lessons.
In November 2022, FTX, one of the largest cryptocurrency exchanges in the world, halted withdrawals and filed for bankruptcy within days. Court cases later found that customer money had been used for other purposes. It is one of the most heavily documented failures in the history of the sector, and it changed how people think about exchanges.
The companies
FTX was founded in 2019 by Sam Bankman-Fried and Gary Wang, and was based in the Bahamas. It was closely linked to Alameda Research, a trading firm that Bankman-Fried had co-founded in 2017. FTX issued its own exchange token, FTT, and Alameda held a large amount of it. At its peak, FTX had a high public profile through sponsorships, advertising and political donations.
Timeline
| Date (2022) | Event |
|---|---|
| 2 Nov | CoinDesk reports on a leaked Alameda balance sheet showing large holdings of FTT |
| 6 Nov | Binance CEO Changpeng Zhao says Binance will sell its FTT; customers start withdrawing in large numbers |
| 8 Nov | FTX halts withdrawals; Binance signs a non-binding letter of intent to acquire FTX |
| 9 Nov | Binance withdraws from the deal after reviewing the books |
| 11 Nov | FTX and Alameda file for Chapter 11 bankruptcy; Bankman-Fried resigns and John J. Ray III becomes CEO |
| 12 Dec | Bankman-Fried is arrested in the Bahamas |
What the court found
US prosecutors charged Bankman-Fried with fraud and conspiracy. Several former colleagues, including Caroline Ellison, Alameda's CEO, and Gary Wang, pleaded guilty and cooperated. At trial in New York in October 2023, witnesses described how customer deposits on FTX had been transferred to Alameda and used for trading, investments, loans and other spending. On 2 November 2023, a jury convicted Bankman-Fried on seven counts, and in March 2024 he was sentenced to 25 years in prison. His appeal was rejected by a federal appeals court in June 2026.
The new management in bankruptcy said the exchange had weak financial controls and poor record-keeping. This article reports those statements as findings made by the parties and courts, not as the author's conclusions.
Customers and creditors
The bankruptcy estate recovered assets, including investments and holdings, and a reorganisation plan approved in 2024 provided for customer repayments, which began in 2025. The plan calculated claims using crypto prices as of the filing date in November 2022, which some customers felt left them worse off than if they had held their coins through later market rises. The debate over valuation illustrates how bankruptcy law treats crypto.
Contagion and aftermath
- Other crypto firms with exposure to FTX, such as BlockFi, faced severe difficulties and filed for bankruptcy.
- Regulators in several countries examined their rules on exchange custody, related-party trading and disclosure.
- Exchanges began to publish more detailed proof-of-reserves reports, though those reports typically show assets but not liabilities, so they are only a partial check.
The role of the FTT token
FTT was a token issued by FTX that gave holders benefits such as reduced trading fees. Alameda held a significant amount of it, and, according to evidence at trial, used it as collateral for borrowing. When a token's value depends on the health of the company that issues it, using it as collateral is circular: if confidence in the company drops, the token falls, and the collateral shrinks at the same moment. The CoinDesk report of 2 November put this exposure into public view, and Binance's announcement four days later that it would sell its FTT holdings turned concern into a run on withdrawals.
Why the speed mattered
The exchange went from a normal day of trading to a bankruptcy filing in about nine days. A rapid run is possible when depositors can withdraw instantly and everything depends on whether the money is actually there. That is true of any institution, but on-chain withdrawals make the timeline far shorter than traditional bank runs. If you want practical guidance on protecting your own accounts and data, the knowledge base is a useful start.
Lessons commonly drawn
- Custody is a risk in itself. An exchange balance is a claim on a company, not coins under your control.
- Conflicts of interest matter. An exchange and a trading firm under common control can create risks to client assets.
- Governance matters. Boards, independent finance staff and audited statements are tools that reduce risk, and their absence was a recurring theme in the bankruptcy filings.
- Brand and celebrity are not safeguards. Advertising and endorsements say nothing about financial health.
Where this leaves users
None of this means all exchanges are unsafe, and this article does not give financial advice. It does mean that people holding crypto can reasonably ask basic questions: who holds the keys, what is the legal status of my balance, and what happens if the company fails? Self-custody, covered in our wallet security guide, answers some of those questions and brings new responsibilities.
A practical lesson for site owners
The same question applies to your own online business: know who holds your data and funds. Choose providers that are clear about what they do and keep copies of what matters. Zebra Hosting takes payment through Cryptomus and sets out its services plainly on the hosting page.
