KoinlyticsFTX collapsed in November 2022 after a CoinDesk article exposed the depth of interconnection between FTX and its trading arm Alameda Research. Not a hack. Not a smart contract exploit. Simple fraud dressed up as a crypto exchange.
The setup
Sam Bankman-Fried owned both FTX (the exchange) and Alameda (the hedge fund). This was never fully disclosed. Alameda's balance sheet was mostly FTT (FTX's own token), used as collateral for real dollar loans that were routed to Alameda trading losses.
The trigger
Nov 2, 2022: CoinDesk publishes a piece showing Alameda's balance sheet was 40%+ FTT — a circular exposure that would implode if FTT dropped. Nov 6: Binance's CZ tweets that Binance is selling its FTT position. FTT crashes. Alameda's collateral vaporizes.
The bank run
Nov 6-8: FTX users see the news and rush to withdraw. $6B in withdrawal requests flood in. FTX halts withdrawals Nov 8, ostensibly for "maintenance." Actually because customer deposits had been sent to Alameda and cannot be returned.
The unraveling
- Nov 8: FTX halts withdrawals.
- Nov 9: Binance announces potential acquisition, backs out same day after seeing the books.
- Nov 11: FTX files for bankruptcy. SBF resigns.
- Dec 2022: SBF arrested in the Bahamas, extradited to US.
- Nov 2023: convicted on 7 counts of fraud and conspiracy.
- Mar 2024: sentenced to 25 years.
The missing money
~$8B in user deposits gone. The bankruptcy has since recovered most of it (crypto assets that had risen in value), but this is coincidence, not skill.
What it changed
- Proof-of-reserves became a hard requirement, not a talking point.
- Exchange consolidation accelerated.
- Regulatory scrutiny of exchanges intensified globally.
- Self-custody messaging finally landed with retail.