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The FTX Collapse (November 2022)

CEX contagion and the move to self-custody.

The balance sheet leak

On November 2, 2022, CoinDesk reported that Alameda Research's balance sheet held about $14.6 billion in assets, including billions in FTT, the token issued by its sister exchange FTX. That meant much of Alameda's collateral was a token whose value depended on FTX.

The bank run

On November 6, Binance CEO Changpeng Zhao said Binance would sell its FTT. Customers withdrew about $6 billion in 72 hours, FTX paused withdrawals on November 8, Binance walked away from a proposed rescue on November 9, and FTX filed for Chapter 11 on November 11, 2022.

Where customer funds went

Bankruptcy filings and trial testimony showed customer deposits had been routed to Alameda through a fiat account and a software exemption that let Alameda run a negative balance. Sam Bankman-Fried was convicted of fraud in November 2023 and sentenced to 25 years in March 2024.

The shift to self-custody

Withdrawals from centralized exchanges to self-custody wallets spiked, and DEX volume share rose. Exchanges such as Binance, OKX and Kraken began publishing Merkle-tree proof of reserves.

Recovery

The FTX estate, led by John J. Ray III, recovered assets including Anthropic shares and Solana tokens. Its 2024 plan proposed repaying most customers more than 100 percent of their November 2022 dollar claims, though less than the current value of the coins.

By the numbers

For The FTX Collapse, the reference figures are bankruptcy of November 11, 2022, shortfall of ~$8 billion, ftt drawdown of ~90%+, founder of Convicted 2023. The comparison table below lines up date (2022), event — Nov 2: CoinDesk Alameda report; Nov 6: Binance announces FTT sale; Nov 8: FTX halts withdrawals; Nov 11: Chapter 11 filing.

Modeling The FTX Collapse with the Portfolio Herfindahl Concentration Scorer

The Portfolio Herfindahl Concentration Scorer takes three inputs — Top asset weight (%), Second weight (%), Other assets (equal). HHI = Σ weight². With its default inputs (Top asset weight (%) = 60; Second weight (%) = 25; Other assets (equal) = 5) it returns 0.43 HHI; swap in the figures from The FTX Collapse above to reproduce the scenario yourself.

Modeling The FTX Collapse with the Crypto Profit Loss Calculator

The Crypto Profit Loss Calculator takes three inputs — Buy price ($), Sell price ($), Amount invested ($). P/L = invested × (sell ÷ buy − 1). With its default inputs (Buy price ($) = 100; Sell price ($) = 150; Amount invested ($) = 1000) it returns 500 $; swap in the figures from The FTX Collapse above to reproduce the scenario yourself.

Data Table

For educational and informational purposes only. Not financial, investment, tax or legal advice. Figures are approximate and historical; crypto assets are volatile and you may lose capital. Do your own research.