FTX & Crypto Fraud
Sam Bankman-Fried built a $32 billion crypto empire, stole $8 billion in customer funds, donated $100 million to politicians, and was convicted on seven federal fraud counts — all by age 31.
Overview
FTX, once the third-largest cryptocurrency exchange, collapsed in November 2022 when it was revealed that customer deposits had been secretly funneled to Alameda Research, a hedge fund also controlled by founder Sam Bankman-Fried (SBF). The fraud amounted to approximately $8 billion in misappropriated customer funds.
SBF had cultivated an image as the golden boy of crypto — a disheveled, game-playing effective altruist who lived in a $35 million Bahamas penthouse with roommates. He became a major political donor, contributing over $100 million to campaigns and political groups in the 2022 election cycle alone, making him one of the largest individual donors in American history.
His political donations spanned both parties, though the majority went to Democrats. SBF and FTX executives gave to both the Democratic and Republican parties, as well as to PACs supporting candidates who sat on committees overseeing cryptocurrency regulation — raising questions about whether the donations were intended to influence regulatory oversight.
SBF was convicted on all seven federal fraud counts in November 2023 after a trial in which former Alameda CEO Caroline Ellison and other FTX executives testified against him as cooperating witnesses. He was sentenced to 25 years in prison. Bankruptcy proceedings revealed that FTX's financial controls were virtually nonexistent — expenses were approved via emoji reactions on group chats.
"Bankruptcy proceedings revealed that FTX's financial controls were virtually nonexistent — expenses were approved via emoji reactions on group chats."
Timeline
FTX Founded
Sam Bankman-Fried launches FTX cryptocurrency exchange, which rapidly grows to become the third-largest.
Political Donation Spree
SBF and FTX executives donate over $100 million to political campaigns and PACs.
FEC records
CoinDesk Exposé
CoinDesk reports that Alameda's balance sheet is largely composed of FTT tokens created by FTX, revealing the circular dependency.
CoinDesk reporting
FTX Files for Bankruptcy
FTX files for Chapter 11 bankruptcy after customer withdrawals reveal an $8 billion hole.
Delaware bankruptcy filing
SBF Convicted
Bankman-Fried convicted on all seven federal fraud counts after a month-long trial.
SDNY trial verdict
Sentenced to 25 Years
SBF sentenced to 25 years in federal prison.
SDNY sentencing
Key Players
Sam Bankman-Fried
Built a $32 billion empire and stole $8 billion in customer funds. Sentenced to 25 years.
Caroline Ellison
Former CEO of Alameda and SBF's ex-girlfriend. Cooperated with prosecutors and testified at trial.
John Ray III
Appointed to manage FTX's bankruptcy. Previously oversaw Enron's liquidation, called FTX worse.
Political Influence Operation
SBF's political donations were not merely philanthropic — they appear to have been a deliberate strategy to influence cryptocurrency regulation. FTX and its executives donated to members of Congress who sat on committees overseeing financial regulation, and SBF personally met with SEC officials and Congressional leaders.
After the collapse, both parties rushed to return FTX-linked donations, though not all funds were returned. The episode raised fundamental questions about the role of money in politics and the ability of wealthy individuals to buy regulatory forbearance.
Primary Sources3 cited
DOJ Indictment and Trial Transcripts
Federal indictment and trial records from SDNY.
FEC Donation Records
Federal Election Commission records of SBF and FTX executive donations.
FTX Bankruptcy Court Filings
Chapter 11 filings documenting the financial chaos at FTX.
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