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New York Judge approves $12.7 billion settlement between FTX and CFTC
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New York Judge approves $12.7 billion settlement between FTX and CFTC

2024-08-08 by Ndaman Olayinka 3 minutes read
New York Judge approves $12.7 billion settlement between FTX and CFTC

The Commodity Futures Trading Commission (CFTC) filed a lawsuit 20 months ago, and on Wednesday a New York judge officially approved a consent order, requiring the defunct cryptocurrency exchange FTX and trading company Alameda Research to pay $12.7 billion to creditors.

According to a court document on August 7, 2024, Judge P. Kevin Castel of the United States District Court for the Southern District of New York granted the approval of the settlement deal between FTX, Alameda Research, and the CFTC. It made no attempt to obtain a civil monetary fine.

FTX and Alameda's are expected to pay $8.7 billion as compensation to individuals who lost money as a result of both companies violations of the Commodity Exchange Act. Disgorgement of an extra $4 billion is required for profits made as a result of the violations, the post added.

The firms' current bankruptcy proceedings will be used to manage the restitution and disgorgement amounts. Repayment of FTX and Alameda creditors will be made using funds or assets from the bankruptcy, with distribution in accordance with the court's order being supervised by the plan administrator or John Ray, FTX Trading's interim CEO.

The order prohibits FTX and Alameda from trading digital assets and serving as market intermediaries. It does not, however, impose civil penalties, according to the document. In any related investigations or proceedings, FTX and Alameda shall provide the CFTC with full cooperation, including provision of all required documents and testimony.

In November 2022, FTX collapsed due to claims that its owners and an affiliated hedge fund, Alameda Research, had embezzled and misused billions of dollars in customer funds. The CFTC filed its first complaint towards the end of 2022, claiming that Alameda, FTX, and its founder, Sam Bankman-Fried, had committed fraud that cost consumers $8 billion in losses.

Sam Bankman-Fried, the exchange's founder, was found guilty in November 2023 of seven counts of money laundering, conspiracy, and fraud. He was sentenced to almost 25 years in prison and ordered to forfeit $11 billion in March.

Disclaimer: This information should not be considered financial advice by any means. Please do your own research before making any investment decisions. The views in the articles are personal opinions only. Whale Insider is not responsible for any financial losses incurred.