Plain English
FTX was a Bahamas-based crypto exchange founded in 2019 by Sam Bankman-Fried (SBF). At its peak in 2022, it was the third-largest exchange globally with ~$15B in user assets. Collapsed in November 2022 after revelations that customer funds had been commingled with sister hedge fund Alameda Research and used for trading and venture investments.
How it actually works
The collapse exposed missing customer funds estimated at $8B+. SBF was convicted on seven counts including wire fraud in November 2023 and sentenced to 25 years in prison. Some user recovery is occurring through the bankruptcy estate (final estimates 100%+ recovery in USD terms, though the in-kind crypto recovery is far less since prices have risen).
What it means for you
FTX is the canonical lesson on counterparty risk in CeFi. The exchange looked safe by every external signal — sports sponsorships, celebrity endorsements, deep liquidity, fast UX — and still vaporized. The HNW takeaway: never trust any centralized venue with more than active trading capital, regardless of size. “Not your keys, not your coins.”
Will this information be valuable to you?
Already a member? Send this term to your coach inside the community and tell them exactly what you need help with — we will build a plan around it.
New here? Join the membership, become a student, or sit in on the community. Your starting point is one short call.
Educational content only. Not investment, tax, or legal advice.