Sam Bankman-Fried says his “biggest mistake” during the collapse of FTX wasn’t mismanaging billions in customer funds — it was giving up control of the company just hours before a potential lifeline appeared.
In an interview with Mother Jones published Friday, the disgraced founder of the once‑$32 billion crypto exchange said handing over FTX to bankruptcy specialist John J. Ray III on November 11, 2022, cost him a last‑minute deal that might have saved the exchange. “The single biggest mistake I made by far was handing the company over,” he said.
Minutes after signing documents transferring control, Bankman‑Fried claimed he received a call about an external investment that could have plugged the $8 billion hole in FTX’s balance sheet. By then, it was too late. Ray, recommended by law firm Sullivan & Cromwell, filed for Chapter 11 bankruptcy that same day and brought in the firm to handle the proceedings.
Two days earlier, S&C attorney Andrew Dietderich had already proposed hiring Ray as chief restructuring officer “in a possible Chapter 11,” according to emails later made public.
Bankman‑Fried was arrested in the Bahamas a month later and extradited to the United States, where he was convicted on seven felony counts, including wire fraud and money laundering. He is now serving a 25‑year prison sentence.
The FTX meltdown, one of the largest financial failures in crypto history, stemmed from the misuse of customer deposits to cover losses at sister hedge fund Alameda Research. Prosecutors said billions in client funds were transferred without consent, a shortfall now known as the “Alameda gap.”
Sullivan & Cromwell, now facing scrutiny over its role, earned more than $171 million in legal fees by June 2024 for its work on the bankruptcy, according to court filings cited by Reuters. A lawsuit filed in February 2024 by a group of FTX creditors accused the firm of aiding the fraud but was voluntarily dismissed later that year.
Nearly three years after the implosion, the FTX estate has repaid $7.8 billion to creditors out of an estimated $16.5 billion in recovered assets. In February, it issued $1.2 billion in initial repayments, followed by $5 billion in May and another $1.6 billion in September, according to Sunil, a member of the FTX Customer Ad‑Hoc Committee.
The exchange plans to return at least 118 % of the value owed to 98 % of its customers as of November 2022 — a remarkable turnaround for a bankruptcy that once left investors fearing they’d lost everything.
The collapse of FTX triggered a cascade of failures across the crypto industry, wiping out billions in market value and sending Bitcoin plunging to near $16,000. It remains a defining moment for digital asset regulation and one that continues to cast a long shadow over crypto’s credibility.