President Donald Trump said in January that he had no plans to pardon Bankman-Fried. He cleared Binance founder Changpeng Zhao and Silk Road creator Ross Ulbricht, as well as other white-collar offenders.
Bankman-Fried ran two companies at once. FTX was a crypto exchange, which holds customers’ money like a broker does and is not supposed to touch it. Alameda Research was a trading company that he also owned. He moved billions of dollars in FTX customer deposits to Alameda, which spent the money on trades, venture capital investments, political donations, and real estate in the Bahamas, while FTX’s software exempted Alameda from rules that would have required it to cover its losses like any other trader.
The facade was busted after CoinDesk obtained Alameda’s balance sheet in November 2022 and discovered that most of what the company considered assets was FTT – a token that FTX had created itself and could issue at will.
The guarantee backing Alameda was actually something its sister company invented. Further cracks appeared after leading exchange Binance announced days later that it would sell its FTT holdings, leading to a rapid collapse in FTT prices.
Customers rushed to withdraw their deposits and FTX could not return the money because it was no longer there. The exchange filed for bankruptcy on November 11, 2022, a little over a week after the story broke.
