FTX Trading Ltd., trading as FTX (Futures Exchange), is a bankrupt company that formerly operated a cryptocurrency exchange and crypto hedge fund. The exchange was founded in 2019 by Sam Bankman-Fried and Gary Wang and collapsed in 2022.

At its peak in July 2021, the company had over one million users and was the third-largest cryptocurrency exchange by volume, and its app was widely advertised as a "safe, easy way to get into crypto". As of November 2022, FTX was the third-largest digital currency exchange boasting an active daily trading volume of US$10 billion and a valuation of $32 billion. FTX is incorporated in Antigua and Barbuda and headquartered in the Bahamas. FTX is closely associated with FTX.US, a separate exchange available to US residents.

Since November 11, 2022, FTX has been in Chapter 11 bankruptcy proceedings in the US court system. Public concern began with rumors of unethical and fraudulent inter-company transfers of client funds. In November 2022 CoinDesk also raised concerns stating that FTX's partner firm Alameda Research held a significant portion of its assets in FTX's native token (FTT). Following this revelation, rival exchange Binance's CEO Changpeng Zhao announced that Binance would sell its holdings of the token, which was quickly followed by a spike in customer withdrawals from FTX.

Sam Bankman-Fried and Zixiao "Gary" Wang founded FTX in May 2019. FTX began within Alameda Research, a trading firm founded by Bankman-Fried, Caroline Ellison, and other former employees of Jane Street in 2017, in Berkeley, California. FTX is an abbreviation of "Futures Exchange". Changpeng Zhao of Binance purchased a 20% stake in FTX for approximately $100 million, six months after Bankman-Fried and Wang started the firm.

In August 2020, FTX acquired Blockfolio, a cryptocurrency portfolio tracking app, for $150 million. In July 2021, the venture raised $900 million at an $18 billion valuation from over 60 investors, including Softbank, Sequoia Capital, and other firms. Bankman-Fried bought out Zhao's stake for approximately $2 billion. In September of that year, FTX moved its headquarters from Hong Kong to The Bahamas.

On January 14, 2022, FTX announced a $2 billion venture fund named FTX Ventures, raising $400 million in Series C funding at a $32 billion valuation that month. The FTX Ventures website went offline in November 2022. On February 11, 2022, FTX.US announced that the company would soon begin offering stock trading to its US customers.

In September 2022, Bloomberg reported on the close relationship between Alameda Research and FTX. Bloomberg noted that Alameda had functioned as a market maker for FTX early in the exchange's history, and that the trading firm remained, in June and July 2022, the biggest known depositor of stable coins on FTX. Bloomberg further stated that the regulatory oversight which applies to companies operating in traditional equities markets would have prohibited the relationship between the two firms were it applicable.

Alameda's trading on FTX meant the trading firm was potentially in a position to gain financially when others lost money on the exchange. Bankman-Fried defended FTX's use of Alameda as a liquidity provider.

According to John J. Ray III, Alameda had a "secret exemption" from FTX's auto-liquidation protocol. Later, the existence of such an undisclosed beneficial relationship was described by Ray, the new CEO of FTX, as a "complete failure of corporate controls" and indicated gross mismanagement. Between early 2021 and March 2022, Alameda Research amassed crypto tokens ahead of FTX announcing the decision to list them for trading.

According to anonymous sources cited by The Wall Street Journal, FTX had lent $10 billion of its customers' assets to Alameda Research in 2022. Alameda CEO Caroline Ellison disclosed to other Alameda employees that she, Sam Bankman-Fried, Gary Wang, and Nishad Singh knew about that decision. An anonymous source cited by The New York Times said the same. According to the sources cited by The Wall Street Journal, Ellison said the funds were used in part to pay back loans Alameda had taken to make investments. Ray said that FTX used software to conceal the misuse of customer funds.

Several days after the publication of the CoinDesk article, on November 6, Binance CEO Changpeng Zhao said on Twitter that his firm intended to sell all its holdings of FTT. Binance had received FTT from FTX in 2021 during a transaction in which FTX bought back Binance's equity stake in FTX. Zhao cited "recent revelations that came to light" as the motivation for selling FTT. Bloomberg and TechCrunch reported that any sale by Binance would likely have an outsized impact on FTT's price, given the token's low trading volume.

The announcement by Zhao of the pending sale and disputes between Zhao and Bankman-Fried on Twitter led to a decline in the price of FTT and other cryptocurrencies, resulting in a three-day depositor sell-off, like a bank run, of an estimated $6 billion that sent FTX into crisis. On November 8, Zhao announced that Binance had entered into a non-binding agreement to purchase FTX due to what he referred to as a "liquidity crisis" at FTX. The deal did not include the sale of FTX.US.

Zhao announced on Twitter that the company would complete due diligence soon, adding that all cryptocurrency exchanges should avoid using FTT tokens as collateral. He also wrote that he expected FTT to be "highly volatile in the coming days as things develop". On the day of that announcement, FTT price dropped by 80 percent, erasing $2 billion in value.

On November 9, Bloomberg called the acquisition of FTX by Binance "unlikely" due to the poor state of FTX's finances. Bloomberg also reported that the United States Securities and Exchange Commission and Commodity Futures Trading Commission were investigating the nature of FTX's connections to Bankman-Fried's other holdings and its handling of client funds. Later that day, The Wall Street Journal reported that Binance would not move forward with the deal to acquire FTX.

Binance cited FTX's reported mishandling of customer funds and pending investigations of FTX as the reasons for not pursuing the deal. Bankman-Fried said in a Slack message that FTX had learned through the press about Binance's concern and decision.

On November 9, FTX's website said that it was not processing withdrawals at that time. Bankman-Fried said that although the firm's assets were worth more than its clients' deposits, it would need funds from outside to meet demand for withdrawals due to a lack of liquidity. Bankman-Fried stated on November 9 that FTX.US, as a separate company, was "not currently impacted" by the crisis.

On November 10, Axios cited anonymous sources who said that FTX approached Kraken for a potential rescue deal. Bankman-Fried made several statements on November 10, taking responsibility for FTX's failure and indicating that FTX was still seeking capital to remain solvent. Bankman-Fried also announced that Alameda Research would cease trading and end operations. FTX's in-house legal and compliance teams had, for the most part, resigned by November 10.

Anonymous sources cited by the Wall Street Journal on November 10 said that Alameda Research owed FTX some $10 billion, as FTX had lent funds placed on the exchange for trading to Alameda so that Alameda could make investments with the money. On November 12, anonymous sources cited by the Wall Street Journal said Alameda CEO Caroline Ellison disclosed to other Alameda employees that she, Sam Bankman-Fried, Gary Wang, and Nishad Singh knew that client deposits were transferred from FTX to Alameda. An anonymous source cited by the New York Times on November 14 said the same.

According to the sources cited by The Wall Street Journal, Ellison said the funds were used in part to pay back loans Alameda had taken to make investments.

Though Bankman-Fried, on November 10, wrote on Twitter that FTX's US customers did not have reason to worry, employees began attempting to sell assets belonging to the firm on the same day. These assets include stock-clearing company Embed Financial Technologies and the naming rights to FTX Arena. On November 10, the Securities Commission of the Bahamas froze the assets of one of FTX's subsidiaries, FTX Digital Markets Ltd, "and related parties", and provisionally appointed an attorney as liquidator. Japan's Financial Services Agency ordered FTX Japan to suspend some operations.

The company's Australian subsidiary was placed under administration.

On November 10, the team running the FTX Future Fund, an ostensibly charitable group bankrolled by Bankman-Fried, announced that they had resigned earlier that day. Future Fund had committed $160 million in charitable grants and investments by September 1 of that year. Crypto lender BlockFi, which was affiliated with FTX, announced on November 10 that it was suspending operations as a result of FTX's collapse.