FTX Crash: Timeline, Fallout and What Investors Should Know

Crypto exchange FTX crashed in November 2022, sinking major tokens in its wake.
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Written by Dalia Ramirez
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Edited by Claire Tsosie
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FTX, a major cryptocurrency exchange, and FTX.US, its U.S. branch, filed for Chapter 11 bankruptcy on Nov. 11, 2022. Former founder and CEO Sam Bankman-Fried, known as SBF, was arrested on Dec. 12, 2022 in the Bahamas and was extradited to the U.S., where he later pleaded not guilty to eight criminal charges including wire fraud and conspiracy to defraud investors.

On March 28, 2024, SBF was sentenced to 25 years in prison. As a part of the sentencing, the judge also suggested more than $11 billion be seized from SBF, in the hope those funds could help former FTX customers recoup some of their lost funds


FTX’s crash had wide-reaching implications throughout the crypto market, as cryptocurrencies and exchanges with exposure to FTX or its native token, FTT, faced sinking prices and financial troubles.

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What happened to FTX?

FTX and FTX.US crashed due to a lack of liquidity and mismanagement of funds, followed by a large volume of withdrawals from rattled investors. The value of FTT plummeted, taking other coins down with it including Ethereum and Bitcoin, which reached a two-year low on Nov. 9, 2022. Other exchanges were affected by the FTX collapse, including BlockFi, which filed for bankruptcy on Nov. 28, 2022.

Initial reports and sell-offs: Nov. 2 to 8, 2022

  • FTX is a now-defunct cryptocurrency exchange founded by Sam Bankman-Fried in 2019, who served as CEO until Nov. 11. The exchange issued its own token, FTT, and was the fourth-largest crypto exchange by volume as of Nov. 9.

  • Bankman-Fried also founded a crypto trading firm called Alameda Research; CoinDesk reported on Alameda’s troubled balance sheet on Nov. 2. Its largest assets, according to the report, are billions of dollars worth of FTT.

  • The CEO of rival exchange Binance, Changpeng Zhao, also known as CZ, tweeted on Nov. 6 that he was planning to sell off Binance’s stockpile of FTT because of “recent revelations that have came to light,” referring to the Nov. 2 CoinDesk report of FTX and Alameda’s blurred funds. He compared FTX’s situation to the crash of TerraUSD and LUNA in 2022 that tanked the crypto market and cost investors billions of dollars. But typically, such moves aren’t announced publicly.

  • Zhao’s announcement led to a rapid decline in FTT’s value over the next day as suspicion grew that FTX didn’t have the liquidity needed to back transactions and stay afloat. The value of other coins — including BTC and ETH — declined as well, with Bitcoin dropping to a two-year low. Bankman-Fried said in a tweet on Nov. 10 that the platform saw $5 billion in withdrawals on Nov. 6.

Withdrawals freeze, a deal falls through: Nov. 8 to 11

  • Zhao and Bankman-Fried struck a deal for Binance to acquire the non-U.S. branch of FTX. The exchange CEOs signed a nonbinding letter of intent on Nov. 8, essentially promising to bail out the failing exchange to prevent a larger market crash.

  • On Nov. 8, FTX halted all non-fiat customer withdrawals. On Twitter, Bankman-Fried posted a string of apologies explaining FTX’s liquidity issues and promising more transparency.

  • Binance withdrew from the deal. On Nov. 9, Zhao posted on Twitter that Binance had completed its “corporate due diligence” and said it would not be acquiring FTX. Zhao tweeted that the news reports of “mishandled customer funds” and “alleged U.S. agency investigations” contributed to his decision. Bankman-Fried appeared to reference Zhao’s influence on FTX’s fall in a cryptic post on Twitter where he said, “Well played; you won.”

Bankruptcy and hacks: Nov. 11

  • On Nov. 11, FTX announced that it had filed for voluntary Chapter 11 bankruptcy proceedings for FTX, FTX.US and Alameda. Chapter 11 bankruptcy allows businesses to restructure their debt and continue operations, unlike Chapter 7 bankruptcy, where assets are liquidated.

  • FTX.US also temporarily froze withdrawals on Nov. 11, following the bankruptcy announcement, despite earlier reassurances that FTX.US was not affected by FTX's liquidity troubles. Withdrawals were later reopened.

  • FTX and FTX.US wallets were emptied on the evening of Nov. 11 in an apparent hack. More than $600 million was drained from the wallets, CoinDesk reported. FTX posted about the hack on its support channel the instant-messaging service Telegram, saying, "FTX has been hacked. FTX apps are malware. Delete them. Chat is open. Don't go on FTX site as it might download Trojans." Trojans are malware disguised as legitimate software.

  • A Twitter user reported that hackers were also attempting to access bank accounts linked to FTX.US. Plaid, a service that connects customer bank accounts with financial applications, responded to “concerning public reports” by shutting off FTX’s access to their products, noting they didn’t see an indication their tools had been used fraudulently.

  • FTX general counsel Ryne Miller posted on Twitter the same evening that the company would expedite moving remaining assets to cold storage — meaning offline — because of the "unauthorized transactions," referring to the apparent hack.

The aftermath: Nov. 12, 2022 to Jan. 2023

  • FTX’s balance sheet dated Nov. 10 was published by the Financial Times on Nov. 14, showing $9 billion in liabilities and just $900 million in assets that could be easily sold. It had a mess of entries including a “hidden, poorly internally labeled ‘fiat@’ account” with a balance of negative $8 billion.

  • New FTX CEO John J. Ray III, who led the infamous energy giant Enron through its bankruptcy and liquidation process about two decades ago, painted a dire picture of FTX’s financials in a Nov. 17 court filing.

  • An emergency motion added to the FTX bankruptcy filing on Nov. 17 reported that there is “credible evidence” that Bahamian regulators directed Bankman-Fried to gain “unauthorized access” to FTX funds and transfer them to the Bahamian government. It’s unclear whether or when these transfers happened, as they would have occurred during the same time period as the hack. A press release from the Securities Commission of the Bahamas appears to support these reports.

  • On Dec. 12, authorities in the Bahamas arrested Bankman-Fried at the request of the U.S. government to extradite him for eight criminal charges including wire fraud and conspiracy to defraud investors. Bankman-Fried had scheduled to testify in front of the House Financial Services Committee the following day.

  • On Dec. 13, Ray testified to the House committee instead of Bankman-Fried. He told lawmakers that FTX had “no record-keeping whatsoever."

  • On Dec. 19, former Alameda Research CEO Caroline Ellison and FTX cofounder Gary Wang pleaded guilty to "charges arising from their participation in schemes to defraud FTX’s customers and investors, and related crimes," according to federal prosecutors. The two are cooperating with the government in the FTX case.

  • On Jan. 3, 2023, Bankman-Fried appeared in a New York courtroom, where he pleaded not guilty to each of the charges against him. Bankman-Fried's decision to contest the allegations means there could potentially be a criminal trial on the matter.

Guilty verdict and sentencing

In Nov. 2023, SBF was found guilty of fraud with a maximum sentence of 115 years in prison

. On Mar. 28, 2024, SBF was sentenced to 25 years in prison, and the judge asked that SBF forfeit more than $11 billion to help repay customer funds that were lost. This is more than the roughly $10 billion SBF was convicted of defrauding from FTX users.

What happened to the U.S. crypto market after the crash?

FTX’s troubles had a profound effect on the U.S. crypto market:

  • Bitcoin’s price dipped below $16,000 on Nov. 9, 2022 and again on Nov. 14. $3.2 billion in Bitcoin was taken off exchanges between Nov. 8 and Nov. 15, 2022.

  • Ethereum's price dipped below $1,100 on Nov. 9, 2022.

  • Solana dipped below $13 on Nov. 9, 2022, following CoinDesk’s report that Alameda held a large amount of it. Applications on the Solana network have lost over $700 million in combined assets, and Solana dipped below $13 again on Nov. 13.

  • Tether briefly depegged from the U.S. dollar by 3% on Nov. 10, 2022.

Cryptocurrency is a relatively risky investment and should be treated accordingly. High-risk investments should make up a small part of your overall portfolio, and diversifying the range of cryptocurrencies you buy can help minimize risk.

Which exchanges were exposed to the FTX crisis?

With such high volatility and so many customers unable to withdraw their funds from FTX, there was heightened concern among crypto traders about the fate of their assets on other exchanges. Here’s how major exchanges were affected:

  • FTX and FTX.US froze withdrawals and filed for Chapter 11 bankruptcy.

  • BlockFi froze withdrawals and filed for Chapter 11 bankruptcy, largely due to its exposure to FTX. Its balance sheet showed an outstanding $275 million loan to FTX US, along with other liabilities and assets ranging from $1 billion to $10 billion.

  • Gemini co-founder Cameron Winklevoss tweeted that the platform had no material exposure to FTX, FTT or Alameda on Nov. 9, 2022; however, on Nov. 16, Gemini told customers they might be unable to withdraw funds from Gemini Earn, a program that was paying upward of 8% rewards on assets customers lend out. The problem is with Gemini's third-party lending partner, Genesis Global Capital, which froze withdrawals amid liquidity concerns.

  • Crypto.com CEO Kris Marszalek tweeted that the company's direct exposure to the “FTX meltdown” is “immaterial,” amounting to less than $10 million in the company’s own capital. The platform did suspend withdrawals of stablecoins USD and USDT on the Solana network but did not explain why.

  • Binance.US, the U.S. branch of Binance, which is separately managed, posted on Twitter that Binance’s dealings with FTX would not affect U.S. users.

  • Coinbase CEO Brian Armstrong tweeted that the platform has no material exposure to FTX, FTT or Alameda. But the turbulence took a toll on the company. On Jan. 10, 2023, Coinbase announced that it would lay off nearly 1,000 people, in part due to market conditions related to the "fallout from unscrupulous actors in the industry."

  • Robinhood told NerdWallet that the service had no direct exposure to Alameda, FTX or any of its entities. FTT can’t be traded on the platform.

  • EToro told NerdWallet that the platform had no corporate exposure to FTX or FTT. Users can trade FTT on EToro, though this isn’t applicable to U.S. users.

  • Kraken told CoinDesk that the platform has no material exposure to FTX or Alameda and does not support FTT trading.

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I’m worried about keeping my crypto with an exchange. What should I do?

If what happened to FTX in 2022 has you nervous about holding crypto on an exchange, consider moving your digital assets to a separate crypto wallet. Most exchanges allow you to transfer assets to these wallets, which can be online (on a separate platform) or offline (on a thumb drive with added security features). Holding your crypto this way doesn’t protect against falling prices, of course, but it can help you sidestep lockups or an exchange closing its withdrawal window.

» Need a wallet? Here are our top picks

Neither the author nor editor held positions in the aforementioned investments at the time of publication.

Claire Tsosie, assigning editor at NerdWallet, contributed reporting to this article.

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