The FTX Bankruptcy, Explained
FTX, once one of the world’s largest cryptocurrency exchanges, filed for Chapter 11 bankruptcy protection in the United States in November 2022 after a rapid collapse in customer confidence and a liquidity crisis. It became the defining crypto bankruptcy of its era and the case most people reach for when they picture what a crypto failure looks like.
This piece explains the FTX case at the level of process — what happened, what kind of bankruptcy it was, and why it is a useful reference point — without relitigating every detail or asserting facts beyond the public record.
What FTX was
FTX operated a large centralized crypto exchange where customers bought, sold, and held digital assets. A related trading firm and a sprawling group of affiliated entities sat alongside it. That structure — one brand, many entities — is exactly why the case is instructive: bankruptcy proceedings deal with specific legal entities, not with a logo.
What happened, in outline
Over a short period in late 2022, concerns about the financial condition of FTX and its affiliates triggered a wave of customer withdrawals. The exchange could not meet them. The group filed for Chapter 11 protection in the United States, new management was brought in to run the estate, and the case moved into the long process of identifying assets, cataloguing creditors, and pursuing recoveries for customers and other claimants.
Why FTX is a reference case
Three features make FTX the textbook example:
- Scale. It was among the largest crypto failures ever, which is why it dominated coverage and set expectations for how these cases are reported.
- Entity complexity. A large number of affiliated entities filed, which showed the public how a single brand can be many legal companies — and how a bankruptcy sorts through them one at a time.
- Customer assets. The central questions involved customer holdings on an exchange, which is a very different fact pattern from, say, an operating company reorganizing its own business debts.
That last point matters for readers trying to reason by analogy. Not every crypto bankruptcy is an exchange holding customer funds. Some are operating companies with their own liabilities, where a token or a network is run by separate parties entirely. The FTX template does not map onto every filing.
The lesson for reading other cases
FTX teaches the first discipline of reading any crypto bankruptcy: identify the entities. Ask which specific companies filed, what each one did, and who is actually affected. A filing tells you about the entities named in it. For a case where that distinction is the whole story, see the MVMT Labs Chapter 11 filing, explained, and for the underlying mechanics, what happens when a crypto company files Chapter 11.
Frequently asked questions
When did FTX file for bankruptcy? FTX and a group of affiliated entities filed for Chapter 11 protection in the United States in November 2022.
Was FTX a Chapter 11 or Chapter 7 case? It was a Chapter 11 case. Chapter 11 allows a court-supervised process to manage the estate and pursue recoveries rather than an immediate liquidation.
Does every crypto bankruptcy look like FTX? No. FTX involved a large exchange holding customer assets. Other crypto bankruptcies involve operating companies with their own business liabilities, sometimes with tokens or networks run by separate parties. The facts differ case by case.
By Jordan Feld. Last reviewed 2026-07-21. General information based on public reporting, not legal or financial advice.