Written in August 2026 about events in 2022. This is a retrospective, not contemporaneous reporting.
What happened
On 11 November 2022, FTX Trading Ltd and around 130 affiliated entities filed for Chapter 11 bankruptcy in the District of Delaware. Customer deposits had been routed to Alameda Research, an affiliated trading firm, and used for trading, investments, loans and other spending while customers were told their funds were held separately.
The bankruptcy filings later put the shortfall on the international exchange at roughly 9.2 billion dollars, with a further 141 million on the US entity. A cyberattack drained several hundred million more on the day of the petition itself.
What it changed
Nothing technical. This is the point that matters and the one that gets lost in the spectacle of the fraud.
A customer balance on an exchange is a line in that company's database. It is a record of what the company owes you. The coins backing it, if they exist, are the company's, held in the company's wallets, under the company's keys. When the company files, that line stops being a balance and becomes a claim, and you become an unsecured creditor standing in line behind secured lenders and administrative costs, with the outcome and the timing decided by a court.
The screen did not change on the way down. It said the same number on 10 November as it had in October. The number was never a statement about coins you controlled; it was a statement about a company's willingness and ability to pay, and that is only visible when it stops being true.
This is the whole content of the phrase "not your keys, not your coins". It is not a claim about ideology. It is a description of who a bankruptcy judge decides for.
What it did not change
Bitcoin's ledger ran through the entire episode without interruption. Blocks kept arriving every ten minutes or so, and every coin in self-custody was exactly where its owner left it, spendable that day and every day since. No court order reached them, because there was nobody to serve.
It also did not make exchanges unusable. An exchange is the normal way to acquire bitcoin and the risk is bounded by the amount and the time it sits there. What FTX priced correctly was the difference between a venue you pass through and a place you leave savings.
What we know now
Sam Bankman-Fried was convicted on seven counts in November 2023 and sentenced to 25 years in March 2024. The estate recovered far more than expected and creditors were repaid, which is a better outcome than Mt. Gox's decade.
The sting is in how. Claims were valued in dollars at the petition date, November 2022, near the bottom of the cycle. A creditor who had one bitcoin on the exchange was repaid the dollar value of one bitcoin as of that day. They did not get a bitcoin back, and they did not get what it was worth when the cheque arrived. Being made whole in a bankruptcy means whole in dollars, on the court's date, which for a bearer asset is not the same as whole at all.