From Beanbags to Handcuffs: The Story of SBF, FTX, and Alameda

In late 2022, the crypto industry witnessed one of its darkest chapters. Sam Bankman-Fried (SBF), once hailed as the “Crypto Mozart,” fell from grace at a speed that rivaled Solana’s block times. His empire — the centralized exchange FTX and its trading arm, Alameda Research — imploded almost overnight.

The story begins innocently enough. SBF, an MIT graduate, built his reputation on arbitrage trades between U.S. and Asian exchanges. With early success, he founded Alameda Research in 2017, followed by FTX in 2019. FTX quickly rose to prominence as a user-friendly, liquid, and widely marketed exchange. Super Bowl ads, celebrity endorsements, and political donations gave SBF an aura of invincibility.

But behind the memes and philanthropy branding (“effective altruism”), the numbers told another story. Alameda held massive positions backed by FTT, FTX’s native token. Worse, customer funds from FTX were secretly funneled to Alameda to backstop reckless bets — a house of cards disguised as an empire.

The breaking point came in November 2022 when Binance CEO Changpeng Zhao (CZ) tweeted that Binance would sell its FTT holdings. That single move sparked panic. Withdrawals surged. Within days, billions evaporated.

FTX filed for bankruptcy on November 11, 2022. Alameda’s balance sheet revealed toxic exposure. Customers discovered their assets were gone. Trust in centralized exchanges shattered.

SBF was arrested in the Bahamas, extradited to the U.S., and charged with fraud, conspiracy, and money laundering. His lieutenants, including Caroline Ellison (Alameda CEO) and Gary Wang (FTX co-founder), turned state witnesses. In 2023, a jury found SBF guilty on all counts. The sentence: 25 years in federal prison.

The collapse didn’t just destroy billions of dollars; it tainted crypto’s reputation globally. Regulators sharpened their knives. Retail investors swore off exchanges. Yet, paradoxically, the chaos also inspired new innovations. Out of FTX’s ashes came projects like Altruist — determined to flip fraud into justice, and cynicism into community-driven redemption. Please subscribe in order not to loose the next parts:

NextTurning Fraud Into Justice: The Mission of Altruist PERP DEX

Last updated