Sam Bankman-Fried Reflects on the Downfall of FTX and Lessons Learned
In the world of cryptocurrency, few events have been as dramatic as the collapse of the FTX exchange. Sam Bankman-Fried, the founder and former CEO, recently opened up about the decisions that led to this monumental downfall. He described the transition of leadership during the bankruptcy proceedings as his “biggest regret,” a choice he believes prevented him from saving the company at a critical juncture.
Insights from Sam Bankman-Fried on FTX’s Bankruptcy
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In an exclusive discussion with the reputable American magazine Mother Jones, Bankman-Fried shared his perspective on the final days leading to the $32-billion exchange’s implosion. The former executive identified his decision to transfer authority to the current CEO, John J. Ray III, as a crucial misstep.
Bankman-Fried disclosed that shortly after formalizing this leadership change, he received a proposal for significant external investment that might have averted the Chapter 11 bankruptcy filing. Unfortunately, by then, it was too late to reverse the decision, as the management handover had already been executed.
Congressional Testimony and Legal Challenges
The interview also touched on an invitation extended to Bankman-Fried and Ray by Rep. Maxine Waters (D-Calif.), the then-chair of the House Financial Services Committee, to testify before Congress in December 2022. During the preparation for this hearing, Bankman-Fried learned of his impending arrest by Bahamian authorities.
Following his extradition to the United States in January 2023, Bankman-Fried faced numerous criminal charges, including the misappropriation of approximately $8.9 billion in customer funds and the collapse of the FTX platform. These charges culminated in a 25-year prison sentence after being convicted of seven felonies.
The Role of Sullivan & Cromwell in Changing Leadership
The conversation further revealed the involvement of Sullivan & Cromwell (S&C), a prestigious law firm, in the leadership transition. Attorney Andrew Dietderich, representing S&C, suggested Ray’s appointment as the chief restructuring officer. Bankman-Fried mentioned the intense pressure from both S&C and former FTX employees to hand over control.
Following his takeover, Ray initiated bankruptcy proceedings and retained Sullivan & Cromwell to manage the process, sparking concerns about potential conflicts of interest. Allegations surfaced that the firm’s past legal representations might have contributed to FTX’s operational failures.
Financial Implications and Recovery Efforts
In June 2024, Sullivan & Cromwell reported earning $171.8 million in legal fees related to the bankruptcy case. Meanwhile, FTX’s estate began compensating creditors, distributing a total of $7.8 billion by September 30, 2025.
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