FTX Repaid Dollars, Not the Future It Stole -By Fransiscus Nanga Roka

This is not a case of just a failure of cryptocurrency: the collapse of FTX A theft in an antique millennial way, cloaked by of algorithms, celebrities’ endorsements and regulatory ambiguity. The architect was incarcerated, the US had repaid billions to creditors by 2026. But the case still starkly reveals an ugly paradox: criminal justice punished Sam Bankman-Fried, while bankruptcy law required many of his victims to relinquish some of the crypto price appreciation that followed in the wake of his fraud.

In 2019, founder Sam Bankman-Fried (SBF) together with Gary Wang founded FTX and was in charge of both the exchange and Alameda Research. FTX was finally able to reach a $32 billion valuation by marketing itself as a secure, institutional quality custodian for customer assets.

The prosecutors showed that SBF had eluded billions in client deposits to Alameda. The funds were used for speculative bets, political donations, real estate and paying off Alameda. He also ordered updates to FTX’s code that permitted Alameda virtually unlimited withdrawals while maintaining the public position that customer assets were safe and separate. Over $8 billion vanished from customers’ accounts.

Alameda’s weak balance sheet was revealed in November 2022, resulting in mass withdrawals. On 11 November, as there were assets that FTX no longer owed back to customers it filed for Chapter 11 bankruptcy. What looked like a liquidity crisis was in fact a solvency crisis manufactured by hidden malfeasance.

SBF was tried in the Southern District of New York after his arrest and subsequent extradition to the US from the Bahamas in December 2022. He was convicted on seven counts including wire fraud and conspiracies to commit securities, commodities, and money-laundering offenses. On March 15, 2024 Judge Lewis Kaplan sentenced him to a 25-year prison term, three years of parole, and nearly $11 billion in forfeiture.

The trial was unfair and he was constrained from presenting his full defense, SBF argued on appeal. However, on June 12, 2026, the US Court of Appeals for the Second Circuit upheld both the conviction and sentence. For how, it has closed off his route out of the courtroom.

So why, exactly, are creditors still annoyed? Why “full recovery” is a bankruptcy mirage Claims were largely converted into US dollars at below market rates for cryptocurrency during the period surrounding FTXs collapse in November of 2022. A creditor who lost one Bitcoin did not get one Bitcoin back; the creditor received fiat assessed when Bitcoin was roughly $16,900. The later market appreciation was primarily attributable to recovery machinery installed at the estate not the original asset holder.

More than $5 billion was paid from the FTX Recovery Trust in May 2025, followed by about $2.2 billion in March 2026 and an additional $900 million beginning on July 31, 202626. Convenience claims came in at 120 per-cent of their permitted dollar value, but certain general unsecured and digital-asset loan reach at 103% cumulated.

However, the 120% of a 2022 valuation held frozen can be just peanuts of the value on sale in that 2026 market. The arithmetic of bankruptcy turned the lost ownership into a claim for dollars, now discounted as to future value and then glorified interest as something that in itself was restorative.

Legislation should be enacted to require: separate customer crypto from exchange property; one for one verifiable reserves and independent proof of liabilities audits; restricting affiliated trading firms borrowing from customer assets; real-time regulatory reporting; and treating in kind restitution as the presumption where identifiable digital assets appreciate after insolvency.

FTX demonstrated that tech did not eliminate financial fraud. It simply let fraud outrun law and bankruptcy accounting put victims in the black before justice actually did so.

Fransiscus Nanga Roka

Faculty of Law University 17 August 1945 Surabaya and Managing Partner Law Firm Victorious Indonesia