Sam Bankman-Fried, the former CEO of FTX, now serving a 25-year prison sentence, says the downfall of his $32 billion company was his biggest mistake was giving control of the exchange to John J. Ray III to lead the bankrupt exchange. He believes this decision stopped him from saving the company.
Biggest Mistake Behind $32 Billion FTX Collapse
In a rare interview from prison, Sam Bankman-Fried says his “single biggest mistake” in November 2022 was handing control of FTX to CEO John J. Ray III. This decision, he claims, ended any chance of saving the company.
Minutes after signing over, Bankman-Fried learned about a potential investment that might have prevented bankruptcy, but it was too late. Hours later, Ray filed for Chapter 11 and hired law firm Sullivan & Cromwell, which has earned over $171 million in fees.
A month later, Bankman-Fried was arrested in the Bahamas and extradited to the U.S., facing seven felony charges for mismanaging FTX and Alameda Research, which caused billions in investor losses.
The Alameda Gap and SBF Arrest
FTX collapsed because customer funds were used without permission to cover Alameda’s trading losses, called the “Alameda gap.”
Further, investigations led to criminal charges against Bankman-Fried, who was arrested in the Bahamas in December 2022 and extradited to the U.S. Meanwhile, later in his trial, he was found guilty and sentenced to 25 years in prison for fraud.
Creditors Still Waiting for Repayment
Nearly three years later, creditors are still waiting to be made whole. FTX has recovered up to $16.5 billion in assets, and repayments have begun, $1.2 billion was distributed in February, followed by $5 billion in May, and $1.6 billion in September.
The estate says it expects to repay at least 98% of customers 118% of what they had in their accounts at the time of the collapse.
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