It was bad risk management. Was too levered up. Then got into a hole. Overtraded to get out of it and got in deeper.
Good podcast on the subject. Apparently all the money he was donating to the Democrats was to ram legislation through to fuck his decentralized competitors.
I spent a few days unravelling this during/after it happened and a bunch of fluff pieces on him are now doing the rounds. I'm not sure which way the podcast is portraying it, but these are the facts.
He stole customer deposits from his exchange which is meant to hold 1:1 deposits to reserves to front run, price manipulate and gamble with on his trading platform. Even if he didn't get into a hole trading he was committing fraud and the exchange was never holding 1:1
He also used his FTX token to "print money". Offered 15% rewards for staking to pump and fake its valuation to use as collateral to get loans.
This wasn't a bad risk management issue. It was a straight up ponzi fraud which had a backdoor built in to it from day 1 to circumvent compliance and steal customer funds.