Sam Bankman-Fried / FTX Collapse

Sam Bankman-Fried, commonly known as SBF, was the co-founder and CEO of FTX, once one of the largest cryptocurrency exchanges in the world, and the founder of Alameda Research, a quantitative trading firm. In November 2022, [FTX collapsed in a matter of days after it was revealed that Bankman-Fried had directed the transfer of billions of dollars in customer funds from FTX to Alameda Research](https://www.theguardian.com/technology/2022/nov/10/what-is-ftx-and-why-is-sam-bankman-frieds-cryptocurrency-exchange-collapsing) to cover the trading firm's massive losses. The collapse wiped out an estimated 8 billion dollars in customer assets and triggered a broader crisis in the cryptocurrency industry.

Samuel Benjamin Bankman-Fried was born on March 6, 1992, in Stanford, California. Both his parents, Joseph Bankman and Barbara Fried, were professors at Stanford Law School. He graduated from the Massachusetts Institute of Technology in 2014 with a degree in physics and mathematics, then worked briefly at Jane Street Capital, a quantitative trading firm, before founding Alameda Research in 2017 and FTX in 2019.

FTX grew rapidly to become the third-largest cryptocurrency exchange by trading volume. Bankman-Fried cultivated an image as an ethical entrepreneur committed to effective altruism — a philosophical movement focused on using wealth to do the most good. He was one of the largest individual political donors in the United States during the 2022 election cycle, contributing tens of millions of dollars primarily to Democratic candidates and causes.

The unraveling began on November 2, 2022, when CoinDesk published a report revealing that Alameda Research's balance sheet was dominated by FTT, FTX's own token, rather than independent assets. This suggested that both companies' finances were dangerously intertwined. On November 6, Changpeng Zhao, the CEO of rival exchange Binance, announced he would sell Binance's FTT holdings, triggering a bank run as FTX customers attempted to withdraw their funds.

FTX halted customer withdrawals on November 8, 2022, as it became clear the exchange did not have sufficient assets to honor withdrawal requests. Binance briefly considered acquiring FTX but withdrew after conducting due diligence that revealed the extent of the financial shortfall. [On November 11, 2022, FTX, Alameda Research, and approximately 130 affiliated companies filed for bankruptcy protection under Chapter 11 in Delaware.](https://www.cnn.com/2022/11/11/investing/ftx-bankruptcy/index.html) Bankman-Fried resigned as CEO and was replaced by John J. Ray III, who had previously overseen the Enron liquidation.

Ray described the situation at FTX as the worst case of corporate governance failure he had ever witnessed, stating in a court filing: "Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information."

Investigations revealed that Bankman-Fried had directed the creation of a secret backdoor in FTX's accounting software — known internally as the "allow negative" feature — that allowed Alameda Research to borrow from FTX without the transactions appearing in standard financial reports or triggering margin alerts. This mechanism enabled Alameda to access customer deposits without FTX's internal risk management systems flagging the transactions. The funds were used to cover Alameda's trading losses, make venture capital investments, purchase luxury real estate in the Bahamas, and make political donations. The fraud affected over one million FTX customers worldwide.

Bankman-Fried was arrested in the Bahamas on December 12, 2022, at the request of U.S. prosecutors. He was extradited to the United States and initially released on a 250-million-dollar bail package secured by his parents' home in Palo Alto, California.

His bail was revoked on August 11, 2023, after Judge Lewis Kaplan found that Bankman-Fried had repeatedly attempted to tamper with witnesses. He was remanded to the Metropolitan Detention Center in Brooklyn.

Bankman-Fried's trial began on October 3, 2023, in the U.S. District Court for the Southern District of New York before Judge Lewis Kaplan. The prosecution presented testimony from several former FTX and Alameda executives who had pleaded guilty and cooperated with the government. Key cooperating witnesses included Caroline Ellison (former Alameda CEO and Bankman-Fried's former romantic partner), Gary Wang (FTX co-founder), and Nishad Singh (FTX head of engineering).

[On November 2, 2023, after approximately four hours of deliberation, the jury found Bankman-Fried guilty on all seven counts, including wire fraud, conspiracy to commit wire fraud, securities fraud, and money laundering.](https://www.npr.org/2023/11/02/1209541703/sam-bankman-fried-verdict-ftx-fraud)

[On March 28, 2024, Judge Kaplan sentenced Bankman-Fried to 25 years in federal prison](https://www.washingtonpost.com/business/2024/03/28/sam-bankman-fried-sentence/) — significantly below the 110-year maximum but substantially above the five to six and a half years recommended by the defense. Kaplan stated that Bankman-Fried had committed "one of the biggest financial frauds in American history" and that he had shown no remorse.

[Caroline Ellison, the cooperating government witness who led Alameda Research, was sentenced to two years in prison in September 2024.](https://www.nytimes.com/2024/09/24/technology/caroline-ellison-sentenced-ftx.html) Gary Wang and Nishad Singh received probation in light of their substantial assistance to prosecutors.

Bankman-Fried is incarcerated at a federal facility. His defense team has filed an appeal of the conviction.