Quick Takeaways
- Sam Bankman-Fried says handing over control was the biggest mistake for FTX survival
- A last-minute investor showed interest just moments too late
- Creditors have gotten $7.8 billion back so far, with more repayments coming
How One Choice Changed the Course of FTX Survival
Sam Bankman-Fried, once the face of the crypto exchange FTX, recently opened up about what he sees as his biggest blunder giving up control of the company right before it collapsed. He now believes this decision wiped out the last real chance at FTX survival.
On November 11, 2022, just minutes after officially handing the reins over to John J. Ray III, a restructuring expert, Bankman-Fried got a call about a possible multi-billion-dollar investment that might have saved the exchange.
Unfortunately, by then, the deal was done he couldn’t take it back. So, what felt like a responsible move at the time turned into, as he puts it, the “single biggest mistake” he made during the whole crisis. That moment effectively closed the door on saving FTX.
How Leadership Changes Hurt FTX Survival Hopes
Things moved fast. The very day Bankman-Fried stepped down, John Ray filed for Chapter 11 bankruptcy and brought in the law firm Sullivan & Cromwell (S&C) to handle the legal fallout.
Interestingly, S&C had actually suggested Ray take over just two days before bankruptcy was officially filed.
In fact, on November 9, an attorney from the firm emailed Bankman-Fried with the idea of hiring Ray as Chief Restructuring Officer before the company even filed for bankruptcy.
Because of this, some FTX creditors later questioned whether the law firm was too involved, even suing them for allegedly enabling fraud.
The lawsuit was dropped in October 2024, but questions still linger, especially since S&C earned over $171 million in legal fees related to FTX.
FTX Creditors Are Getting Paid, But the Road Is Still Long
Despite all the turmoil, FTX has started paying back its customers. Since February 2025, it has returned $7.8 billion across three big rounds:
- $1.2 billion in February
- $5 billion in May
- $1.6 billion in September
There’s still hope on the horizon. FTX reportedly has up to $16.5 billion in assets that could be recovered and distributed.
The plan is to repay at least 98% of customers actually 118% of what they had in their accounts back in November 2022.
Still, many users remain cautious. After all, this was once a $32 billion company that folded practically overnight.
What Really Went Wrong for FTX Survival?
Bankman-Fried himself admits that it wasn’t just bad timing or bad luck that sunk FTX. He points to deeper problems: poor risk management, no dedicated compliance team, and messy accounting.
Alameda Research, FTX’s sister company, had access to customer funds without proper checks. So when Alameda lost billions trading, it meant FTX’s customers were left holding the bag.
Once people realized what had happened, they rushed to withdraw their money, but FTX simply didn’t have enough liquidity.
This gap in funds, now called the “Alameda gap,” was the fatal crack in the system. Bankman-Fried was arrested in the Bahamas a month later, in December 2022, and extradited to the U.S. He is now serving a 25-year sentence after being convicted of multiple fraud charges.
