FTX Trading Ltd. (defunct)

Sam Bankman-Fried founded FTX in 2019 after co-founding Alameda Research, a crypto trading firm. SBF — as he was universally known — presented himself as an "effective altruist" who planned to donate most of his wealth to charity. He lived in a Bahamas compound with nine colleagues, slept on a beanbag under his desk, played video games during investor calls, and wore cargo shorts to meetings with heads of state. Institutional investors found this disarmingly authentic. They gave him billions.

By 2021, FTX had grown into the third largest cryptocurrency exchange in the world, processing billions of dollars in daily trading volume. SBF appeared on the covers of Fortune and Forbes. He donated $40 million to U.S. political campaigns — the second largest Democratic donor after George Soros. He lobbied Congress on crypto regulation, positioning himself as the responsible face of an industry known for scams. Sequoia Capital published a 14,000-word profile calling him "a potential future trillionaire."

On November 2, 2022, crypto publication CoinDesk published a leaked balance sheet showing that Alameda Research — FTX's affiliated trading firm — held most of its assets in FTT, FTX's own token. This meant FTX's sister company was backed largely by FTX's own invented currency. Binance CEO Changpeng Zhao announced he would sell his FTT holdings. A bank run began. Within 72 hours, FTX faced $6 billion in withdrawal requests it could not meet. The exchange halted withdrawals. SBF resigned. FTX filed for bankruptcy on November 11, 2022.

Bankruptcy investigators discovered that approximately $8 billion in customer funds had been transferred from FTX to Alameda Research and used for investments, loans to FTX executives, political donations, and real estate purchases in the Bahamas. SBF had allegedly built a secret backdoor in FTX's accounting software that allowed Alameda to borrow from customer deposits without triggering alerts. Customers who had trusted FTX with their savings discovered their funds were gone.

Sam Bankman-Fried was convicted of fraud and conspiracy on all seven counts against him in November 2023 and sentenced to 25 years in federal prison in March 2024. At sentencing, the judge called his crimes "extraordinarily harmful." Bankman-Fried maintained throughout that he had not intended to steal — that the collapse was a risk management failure rather than a fraud. Prosecutors argued the evidence showed otherwise. The effective altruist who had promised to give away his wealth had stolen it instead.