FTX announced it would refund most of its customers two years after its collapse. Here’s how we got to this point.
Once one of the world’s largest cryptocurrency exchanges before its monumental collapse two years ago, FTX said this week that almost all of its customers will receive the money they are owed.
FTX told a US court on Tuesday evening that it owes around $11.2 billion (€10.4 billion) to its creditors.
The stock exchange estimates that it has between 14.5 billion dollars (13.5 billion euros) and 16.3 billion dollars (15.1 billion euros) to distribute to them.
How did we get to this point? Here’s a timeline of what led to this week’s announcement after an FTX implosion kicked off what many expected would become a “crypto winter.”
2022
November 2: Coindesk reports that Alameda Reseach, Sam Bankman-Fried’s cryptocurrency trading company, holds a large amount of FTT, a token issued by FTX, suggesting that the finances of the two are linked and that Alameda is facing a cash flow crisis. The report scares crypto market participants.
November 6: Rival cryptocurrency exchange Binance announces that the company plans to sell all of its FTT holdings. The price of FTT tanks.
November 8: Binance founder and CEO Changpeng Zhao said his company signed a letter of intent to buy FTX because the smaller exchange was experiencing a “significant liquidity crisis.” This deal, however, would depend on a review of FTX’s books.
Bitcoin price falls 13 percent.
November 9: Cryptocurrency prices fall and after taking a closer look at FTX’s finances, Binance pulled out and said there would be no acquisition. “Our initial hope was that we could help FTX customers provide liquidity, but the issues are beyond our control or ability to help them,” Binance said in a statement.
Bitcoin prices fall another 14 percent.
November 10: Crypto lender BlockFi announced it was “unable to conduct business as usual” and was suspending customer withdrawals due to the implosion of FTX.
November 11: FTX files for Chapter 11 bankruptcy and Bankman-Fried resigns. John Ray III, a longtime bankruptcy attorney best known for having to clean up the mess left after Enron’s collapse, is named the new CEO.
In its bankruptcy filing, FTX listed more than 130 affiliates worldwide. The company valued its assets at between $10 billion (€9.3 billion) and $50 billion (€46.5 billion), with a similar estimate for its liabilities. Bitcoin falls 10 percent.
November 17: Ray gives a damning description of FTX’s operations under Bankman-Fried, ranging from lack of security controls to trading funds used to buy homes and luxury goods for employees.
November 30: As part of a media blitz, Bankman-Fried tells Andrew Ross-Sorkin of the New York Times: “Look, I made a mistake” and did not knowingly misuse his funds. clients.
December 12: Bankman-Fried is arrested in the Bahamas, where FTX headquarters are located.
December 13: The U.S. government charges Bankman-Fried with numerous financial crimes, alleging that he intentionally misled customers and investors to enrich himself and others, while playing a central role in the company’s collapse, which weighed several billion dollars.
Federal prosecutors said Bankman-Fried designed “a scheme and artifice to defraud” FTX’s customers and investors from the year it was founded.
He illegally misappropriated their money to cover expenses, debts and risky transactions at Alameda Research, as well as to make lavish real estate purchases and large political donations, prosecutors said in a 13-page indictment.
December 22: Bankman-Fried’s parents agreed to sign a $250 million bond and keep him in their California home while awaiting trial.
2023
August 11: The judge revoked Bankman-Fried’s bail and sent him to prison after finding he repeatedly tried to influence prosecution witnesses.
October 3: Jury selection begins for trial.
October 27: Bankman-Fried testifies at his trial. He again admitted the failures but denied defrauding anyone.
November 3: Bankman-Fried is convicted of fraud for stealing at least $10 billion from clients and investors.
2024
March 28: Bankman-Fried is sentenced to 25 years in prison. Bitcoin came back strong after a massive sell-off during the scandal. Prices have increased by almost 70 percent.
April 30: Binance’s Zhao is sentenced to four months in prison for looking the other way as criminals used the platform to transfer money linked to child sexual abuse, drug trafficking and terrorism.
May 8: FTX says almost all of its customers will get the money they’re owed, two years after the cryptocurrency exchange’s implosion, and some will get more than that.
