FTX Collapse and Bitcoin Custody Failures — CustodyStress

FTX cases documented in the Bitcoin Custody Incident Archive. The exchange's November 2022 collapse — the largest exchange failure since Mt. Gox — produced a cluster of documented custody access failures as withdrawal processing halted and bankruptcy proceedings froze customer funds.

The most frequently documented recovery path in these cases is Exchange Support (4 of 6 cases). 83% of determinate cases resulted in some form of access recovery.

FTX was one of the world's largest cryptocurrency exchanges, founded by Sam Bankman-Fried in 2019. In November 2022, a CoinDesk report revealed the balance sheet of affiliated trading firm Alameda Research was heavily concentrated in FTX's own FTT token. A bank run followed, and FTX halted withdrawals on November 8, 2022, filing for bankruptcy two days later. Subsequent investigations revealed that customer deposits had been transferred to Alameda Research and used for trading and investments without customer consent.

FTX operated as a custodial exchange. Customers held account balances — not private keys. Bitcoin deposited to FTX was held in exchange-controlled wallets with no customer access to underlying keys. The exchange's terms of service claimed to segregate customer funds, but this proved not to be the case.

Access failed because customer funds had been misappropriated before the collapse — the exchange could not honor withdrawals because the Bitcoin was no longer held. Bankruptcy proceedings froze remaining assets. Recovery required filing creditor claims in US Chapter 11 proceedings, with distributions structured through the bankruptcy process over multiple years.

FTX cases in the archive represent documented individual custody failures associated with the collapse. The archive captures cases where access was specifically blocked or constrained by the bankruptcy process. FTX creditor distributions began in 2024 under the bankruptcy plan.