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The bankrupt crypto exchange FTX and its sister firm Alameda Research will pay nearly $13 billion to creditors, bringing an end to a months-long lawsuit filed by the CFTC.
The defunct crypto exchange FTX alongside its trading firm Alameda Research will pay $12.7 billion back to creditors as part of their settlement with the U.S. Commodity Futures Trading Commission, U.S. District Judge Peter Castel ruled on Aug. 7.
As part of the settlement, the court has barred FTX and Alameda from offering crypto trading services or acting as intermediaries in the market. The order, however, does not impose civil monetary penalties, indicating that the full amount will be allocated directly to compensate the creditors affected by FTX’s collapse.
The settlement, which both FTX and the CFTC had previously agreed upon, aims to resolve ongoing litigation and avoid the costs and delays associated with further court proceedings, as stated in a court document filed on July 12.
CFTC drops $52.2 billion penalty against FTX
The CFTC’s initial complaint, filed in late 2022, accused FTX, its founder Sam Bankman-Fried, and Alameda of engaging in fraudulent activities that led to $8 billion in customer losses. The complaint detailed allegations that Bankman-Fried had instructed FTX executives to devise a scheme enabling Alameda Research to utilize the crypto exchange as a credit line.
Originally, the CFTC sought $52.2 billion in penalties. However, the agency has since agreed to forgo this amount, contingent upon FTX’s compliance with its reorganization plan.
FTX collapsed in November 2022 amid allegations of embezzlement and misappropriation of billions of dollars in customer funds involving its owners and affiliated hedge fund Alameda Research. Sam Bankman-Fried, the founder of the exchange, was sentenced to 25 years in prison and ordered to reimburse $11 billion.
In early May, reports surfaced indicating that FTX had amassed billions more than required to cover its collapse-related losses, a development FTX CEO John Ray hailed as an “unbelievable result,” indicating the exchange’s readiness to fully reimburse its over 2 million customers.
This article first appeared at crypto.news
