Nine Days in November 2022

On 2 November 2022, CoinDesk published a story based on a leaked balance sheet belonging to Alameda Research, the trading firm that Sam Bankman-Fried had founded before building FTX, the cryptocurrency exchange. The document showed that a substantial portion of Alameda's assets consisted of FTT, the exchange token issued by FTX itself — an asset with no independent market existence outside the ecosystem Bankman-Fried controlled. The circular structure it revealed was not, on its face, illegal; the implications for solvency were another matter.

Four days later, Changpeng Zhao, the chief executive of Binance, FTX's main rival, announced on social media that Binance would liquidate its holdings of FTT, which it had received as part of an earlier exit from an equity stake in FTX. The announcement was precise about volume and vague about timeline, which was enough. The FTT token lost roughly 80 percent of its value within forty-eight hours as customers began withdrawing funds from FTX at a rate the exchange could not meet.

On 8 November, Zhao announced that Binance had signed a non-binding letter of intent to acquire FTX. Markets interpreted this as confirmation of insolvency rather than relief. By 9 November, Binance had walked away, citing what it described in a public statement as mishandled customer funds and regulatory investigations. The rescue lasted less than twenty-four hours.

FTX Trading Ltd. filed for Chapter 11 bankruptcy protection in the District of Delaware on 11 November 2022. The filing covered more than 130 affiliated entities, including Alameda Research. Bankman-Fried resigned as chief executive the same day, replaced by John J. Ray III — the restructuring specialist who had previously overseen the Enron liquidation and who told the Delaware court in a sworn declaration that FTX represented the worst failure of corporate controls he had seen in more than forty years of work. Ray's declaration noted an absence of basic financial statements, the commingling of customer and corporate funds, and the use of accounting software not appropriate for an enterprise of FTX's claimed scale.

The bankruptcy schedules filed in subsequent weeks estimated that FTX had more than one million creditors. The exchange had, at its peak, claimed approximately $32 billion in valuation — a figure attributed to a January 2022 funding round reported by PitchBook — making its collapse one of the largest destructions of stated private-market value in the history of the asset class.

On 13 December 2022, federal prosecutors in the Southern District of New York unsealed an indictment charging Bankman-Fried with wire fraud, securities fraud, commodities fraud, and conspiracy to commit money laundering. A superseding indictment followed in 2023. The indictment, as filed by the Department of Justice, alleged that customer deposits on FTX were transferred to Alameda Research and used for venture investments, real estate, and political donations — without customer knowledge or consent.

Three of Bankman-Fried's close associates — Caroline Ellison, Gary Wang, and Nishad Singh — pleaded guilty and agreed to cooperate with prosecutors. Bankman-Fried was convicted on all seven counts by a Manhattan jury in November 2023 and sentenced in March 2024 to twenty-five years in federal prison.

The FTX collapse arrived about four months before Silicon Valley Bank's failure, both events falling inside the same eighteen-month correction that produced a wave of down rounds across the private market and re-introduced the venture industry to what actual insolvency documentation looks like. Where Silicon Valley Bank's collapse took forty hours, FTX's took nine days — fast enough, in a market that moves through social media, to feel like it happened overnight, and slow enough that the court record is precise.