Sam Bankman-Fried, the incarcerated founder and former CEO of the now-bankrupt cryptocurrency exchange FTX, recently revealed what he considers his "biggest mistake" during the company's dramatic $8 billion collapse. Serving a 25-year prison sentence, SBF contends that a crucial decision he made ultimately sealed FTX's fate and prevented a last-minute rescue.
The "Biggest Mistake": Ceding Control
Bankman-Fried claims his gravest error was surrendering leadership of FTX to new management, specifically John J. Ray III, on November 11, 2022. According to SBF, mere minutes after signing over control, he received news of a potential external investment that could have averted bankruptcy. However, he asserts it was too late to revoke his decision, effectively losing the opportunity to save the company he once led, valued at $32 billion. This perspective highlights his continued belief that the collapse was preventable under different circumstances.
The True Cause and Path to Recovery
Despite SBF's personal regret, the collapse of FTX and its sister company, Alameda Research, was ultimately attributed to the massive misappropriation of user funds. Billions of dollars from FTX customers were illicitly transferred to cover Alameda's trading losses, a fraudulent scheme now widely known as the "Alameda gap." Following SBF's handover, John J. Ray III initiated Chapter 11 bankruptcy proceedings. Today, significant progress is being made in recovering assets, with FTX's estate having already distributed a substantial portion of the lost funds, aiming to repay nearly all affected customers 118% of their account value from November 2022.
