President Donald Trump said in January that he had no plans to pardon Bankman-Fried. He has cleared Binance founder Changpeng Zhao and Silk Road creator Ross Ulbricht along with other white collar criminals.
Bankman-Fried ran two businesses at once. FTX was a crypto exchange that stores customer money like a broker does and doesn’t have to touch it. Alameda Research was a trading company he also owned. He moved billions of dollars in FTX customer deposits to Alameda, which used the money on trades, venture investments, political donations and Bahamian real estate, while FTX’s software exempted Alameda from the rules that would have forced it to cover its losses like any other trader.
The facade was blown open after CoinDesk obtained Alameda’s balance sheet in November 2022 and found that most of what the firm counted as assets was FTT — a token FTX itself had created and could issue at will.
The security backing the Alameda was actually something its sister company invented. Further cracks appeared after prominent exchange Binance said 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, just over a week after the story ran.
