President Donald Trump said in January that he had no plans to pardon Bankman-Fried. He has acquitted Binance founder Changpeng Zhao and Silk Road creator Ross Ulbricht, along with other white-collar offenders.
Bankman-Fried ran two companies at once. FTX was a crypto exchange, which holds customers’ money the same way a broker does and is not supposed to touch it. Alameda Research was a commercial company that he also owned. He moved billions of dollars in customer deposits from FTX to Alameda, which spent the money on trading, venture investments, political donations and real estate in the Bahamas, while FTX’s software exempted Alameda from rules that would have forced it to cover its losses like any other trader.
The cover was left open after CoinDesk obtained Alameda’s balance sheet in November 2022 and discovered that most of what the company counted as assets was FTT: a token that FTX had created itself and could issue at will.
The guarantee that supported Alameda was, in effect, something that its sister company had invented. Further cracks emerged after prominent exchange Binance said days later that it would sell its FTT holdings, leading to a rapid collapse in FTT prices.
Clients rushed to withdraw their deposits and FTX was unable to return the money because it was no longer there. The exchange filed for bankruptcy on November 11, 2022, just over a week after the story was published.
