- Sam Bankman-Fried cites transferring FTX control as his worst mistake, blocking a potential last-minute bailout investment.
- FTX users are receiving repayments, with the estate returning $7.8 billion so far from recovered assets.
Sam Bankman-Fried now resides in a federal prison. He recently spoke about a specific choice he made while leading FTX. He identified his decision to transfer authority of the company to John J. Ray III as his most severe error. That transfer occurred on November 11, 2022. A court found Bankman-Fried guilty on multiple felony counts. His sentence is 25 years in prison. The exchange’s failure resulted in a loss of $8.9 billion for its users.
According to his account, he signed the documents appointing Ray. A phone call came minutes later. The call informed him of a potential investment that could have provided enough capital to avoid bankruptcy.
Ray, upon assuming control, filed for Chapter 11 bankruptcy for FTX that same day. He also selected the law firm Sullivan & Cromwell to manage the bankruptcy. Records from the court indicate the firm has submitted bills totaling more than $171 million for its work.
The direct reason for the collapse was the movement of customer funds without approval. FTX user assets were used to cover trading losses at Alameda Research. This sister firm had accumulated substantial deficits. Two days before the bankruptcy filing, an attorney from Sullivan & Cromwell sent an email to Bankman-Fried.
The email recommended Ray for a chief restructuring officer position. Later, a group of FTX creditors pursued legal action against the law firm. They claimed the firm had a role in the fraud. The creditors withdrew their lawsuit in October 2024.
Repayment to FTX users remains an ongoing process nearly three years after the collapse. The bankruptcy estate made its first distribution of $1.2 billion in February. A much larger payment of $5 billion followed in May.
Then, a further $1.6 billion was sent out in September. The combined total returned to creditors now reaches $7.8 billion. The estate has assembled assets worth up to $16.5 billion. This means approximately $8.7 billion is still available for future distributions. Under the approved plan, at least 98% of users will get 118% of their account value from November 2022.
