FTX (FTX Trading / Alameda Research) collapse: FTX collapsed in Nov 2022; customer funds went to Alameda; SBF got 25 years; ~$11B in losses reported

2022-11-06 · updated 2026-10-30 08:08 UTC · by Sentinel, VaultX incident desk

Reported loss$11B

Reported roughly $11B total. Per Reuters, Judge Kaplan found customers lost $8B, equity investors $1.7B and Alameda lenders $1.3B. Trial coverage and AP summaries cited 'at least $10 billion'. The DOJ said SBF was ordered to forfeit $11B. Figures vary by source and stage of the case.

AttributionNo external attacker. A jury convicted FTX founder Sam Bankman-Fried on all seven counts (Nov. 2, 2023), and he was sentenced to 25 years in prison on Mar. 28, 2024 for wire fraud, conspiracy and related counts, according to DOJ and news coverage.

Response score35/100

Public reassurance on 6 Nov was followed days later by frozen withdrawals; post-bankruptcy management cooperated with authorities and reportedly located billions for creditors, but customers were largely unprotected at the time.

Severity95/100

Roughly $11B in reported losses across customers, investors and lenders, and one of the largest exchange failures and fraud convictions in crypto, with market-wide effects.

In early November 2022 FTX customers rushed to withdraw funds, the exchange paused withdrawals, and it filed for bankruptcy on 11 November 2022. Prosecutors and regulators said FTX secretly let Alameda Research take customer assets and use them as its own. This was internal misappropriation, not a blockchain hack. Sam Bankman-Fried was convicted in November 2023 and sentenced to 25 years in March 2024, with roughly $11B in losses reported across customers, investors and lenders.

What happened

According to reports, the collapse unfolded over 6–11 November 2022. After reports and rumors about Alameda's balance sheet, withdrawal pressure surged. On 6 November 2022, Bankman-Fried publicly said FTX client assets were 'fine', while users withdrew about $5 billion that day (per KPMG's summary). FTX paused withdrawals on its international platform on 8 November, and Reuters reported on 10 November that onboarding and withdrawals were suspended until further notice. FTX filed for bankruptcy on 11 November 2022.

Bankruptcy filings soon showed that customer assets had been moved into Alameda Research and lost in risky trading and other uses. Prosecutors also said customer money went to political donations, speculative investments and spending, with the transfers hidden from customers, lenders and investors.

Bankman-Fried was convicted by a jury on 2 November 2023 and sentenced on 28 March 2024 to 25 years in prison. Reports in the research indicate his appeal was later lost; the details and date are not given in the material reviewed.

How it worked

The mechanism alleged at trial was internal code and accounting abuse, not an exploit of any blockchain. Gary Wang testified that Bankman-Fried directed code changes so Alameda could withdraw effectively unlimited amounts and had a huge line of credit, including an 'allow negative flag'.

Prosecutors and regulators said FTX allowed Alameda to take customer assets and use them as its own funds. The withdrawals reportedly covered Alameda's trading losses, funded investments, political donations and spending, while the liabilities were hidden from users and counterparties.

FTT, FTX's own token, was used as collateral and to prop up Alameda's balance sheet. It was illiquid and could not reliably cover the liabilities when confidence collapsed. FTT reportedly fell more than 85% from the CoinDesk-report period by 15 November 2022.

Timeline

2022-11-06Bankman-Fried publicly said client assets were 'fine'; users reportedly withdrew about $5B that day (KPMG summary).
2022-11-08FTX paused customer withdrawals on its international platform.
2022-11-10Reuters reported FTX suspended new-client onboarding and withdrawals. The Bahamian regulator froze FTX's assets (per the gathered sources).
2022-11-11FTX filed for bankruptcy.
2022-11-12John J. Ray III said the company was working with law enforcement and regulators to secure assets and was removing trading and withdrawal functionality.
2022-11-15FTT reportedly down more than 85% from the CoinDesk-report period; Bitcoin dipped below $17,000.
2023-01-01Early 2023 (exact date not given): FTX bankruptcy attorneys said they had located more than $5B in cash, liquid crypto and liquid investment securities.
2023-11-02Bankman-Fried convicted by a jury on all seven counts.
2024-03-28Sentenced to 25 years in prison; $11B forfeiture reported.
2024-06-01During 2024 (exact date not given), FTX said it expected to distribute about $14.5B–$16.3B to customers and creditors under its reorganization plan.

Where the money went

According to the sources, customer assets were diverted into Alameda Research and other FTX-related investments, spending and donations, rather than traced to an external attacker's wallet network. The research provides no address-level tracing to mixers, bridges or exchanges. On recovery: bankruptcy attorneys reportedly located more than $5B in early 2023, and FTX said it expected to distribute about $14.5B–$16.3B to creditors. One 2024 report said FTX was in talks with the DOJ over about $1B seized during the criminal case. The $11B forfeiture order was reported.

The response

Before the bankruptcy, Bankman-Fried said on 6 November that client assets were fine, and withdrawals were then paused within days. After the 11 November filing, new management under John J. Ray III said it was working with law enforcement and regulators to secure assets and disabled trading and withdrawals. Bahamian users were reportedly allowed to withdraw, which FTX said was tied to Bahamian regulator requests. The research found no verified FTX 'insurance fund' that protected customers. The estate later reported locating billions in assets and planned large distributions.

Market and user impact

Customers could not withdraw funds, and FTC complaints described failed withdrawals, poor customer service and allegations of fraud. FTT collapsed and broader crypto markets turned volatile, with Bitcoin dipping below $17,000. Customers, equity investors and Alameda lenders suffered an estimated ~$11B in combined losses. Reported creditor distributions of about $14.5B–$16.3B are expected under the reorganization plan.

What people say

88% negative · 3% positive · the rest neutral · themes: customer funds misused, withdrawal freeze, lack of trust in centralized exchanges, criminal accountability, creditor recovery

How to protect yourself

Exchange balances are claims on the company, not assets you hold. Keep only what you need for trading on an exchange and self-custody the rest.
Be wary of public assurances that funds are 'fine' during a liquidity scare; check independent evidence of reserves and controls.
Be cautious of platforms whose own token backs affiliated entities' balance sheets; an illiquid native token cannot reliably cover liabilities.
Builders and exchanges should enforce strict separation between customer assets and any affiliated trading firm, with access controls and audit trails on code that governs balances.

Check a wallet Scan a token

Still unknown

No complete list of every token and blockchain involved is available in the sources reviewed.
No address-level tracing of funds is provided in the research; no wallet addresses are cited.
Final creditor recovery amounts and distribution timing beyond the reported $14.5B–$16.3B expectation.
Status of the roughly $1B of government-seized assets that FTX was reported to be discussing with the DOJ.
One source URL refers to 'rogue transactions' at FTX on 12 November 2022 (post-filing); the research does not detail it, and it may be a separate event.
Details and date of the appeal outcome are not given in the sources reviewed.

Sources

How we report: Sentinel reads news, investigators' posts, company statements and on-chain data, attributes every claim to its source and marks unconfirmed numbers as reported. Severity measures size and systemic risk; the response score measures how fast and transparently users were protected. Not financial advice and not a finding of guilt. Corrections: contact us.

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