Chronology of Sam Bankman-Fried’s Decline and the Monumental Collapse of FTX

Once hailed as a wunderkind in the crypto realm, Sam Bankman-Fried ultimately became synonymous with its meltdown. As FTX’s founder and erstwhile chief, he was handed a 25-year prison sentence on Thursday upon his fraud conviction, having illicitly diverted over $10 billion from users and backers. The disintegration of a crypto titan sent shockwaves through the sector and precipitated a market nosedive.

Below is the chronicle of the events leading to this downfall.

2022

Nov. 2: Coindesk discloses that Alameda Research, Bankman-Fried’s trade company, is sitting on a hefty stack of FTT tokens, issues by FTX, indicating a blurry line between their financials. Revealing potential for a liquidity crisis, the news causes unrest among crypto traders.

Nov. 6: Binance, a competitive exchange, declares its intention to offload its FTT stake, prompting a decline in the token’s value.

Nov. 8: Binance’s chief, Changpeng Zhao, makes public a tentative intent to acquire FTX, citing the latter’s “substantial liquidity crisis.” The acquisition stipulates an FTX financial examination. Meanwhile, Bitcoin’s value takes a 13% hit.

Nov. 9: Crypto valuations tumble as, on closer inspection of FTX’s fiscal health, Binance backs away, announcing the deal has fallen through. “Our initial hope was to extend support towards the liquidity needs of FTX’s customer base but the magnitudes of the issues at hand are out of our purview to assist,” Binance indicated. This sees Bitcoin values plummet by another 14%.

Nov. 10: BlockFi, a crypto lender, declares it must halt business as it is heavily impacted by FTX’s collapse, resulting in a temporary freeze on client withdrawals.

Nov. 11: FTX seeks Chapter 11 protection, with Bankman-Fried stepping down. John Ray III steps in as the new lead, known for tidying the Enron bankruptcy. FTX discloses owning a diverse mix of over 130 international entities, estimating both assets and liabilities within the $10-50 billion range. Bitcoin’s worth drops by 10%.

Nov. 17: Ray doesn’t mince words about the misconduct at FTX under Bankman-Fried, highlighting missing security measures and company monies spent on personal luxuries for staff.

Nov. 30: Bankman-Fried, addressing New York Times’ Andrew Ross-Sorkin, admits “a major oversight” without any malicious intent with customers’ capital.

Dec. 12: Bankman-Fried is taken into custody in the Bahamas, where FTX’s headquarters are based.

Dec. 13: The US justice apparatus accuses Bankman-Fried of a myriad of fiscal offenses, charging him with customer and investor deception for personal gain, which played a pivotal role in the multibillion-dollar demolition of the company. Allegations arose that Bankman-Fried was diverting funds to cover lavish personal expenses, speculative trades at Alameda Research, and making hefty political contributions, all detailed within a 13-page indictment.

Dec. 22: Bankman-Fried’s folks commit to a $250 million bond, enabling him home detention in California as he awaits a trial.

2023

Aug. 11: After apparent attempts to tamper with witnesses, Bankman-Fried’s release is revoked and he’s incarcerated.

Oct. 3: Jury selection for the trial commences.

Oct. 27: Bankman-Fried testifies, reaffirming his errors but rejecting fraud allegations.

Nov. 3: Bankman-Fried is found guilty on fraud charges for misappropriating $10 billion plus from clients and investors.

2024

March 28: Ultimately, Bankman-Fried is doled out a 25-year imprisonment. Meanwhile, Bitcoin has rallied back, climbing nearly 70% from the depths it had hit amidst the scandal.