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Highlights
- FTX and Alameda Research will pay $12.7 billion to creditors.
- US District Judge Peter Castel approved the consent order in a recent filing.
- This comes after months of dispute following the firm’s bankruptcy filing.
A US Judge has approved a settlement between defunct crypto exchange FTX and sister company Alameda Research alongside the Commodity and Futures Exchange Commission (CFTC). The bankrupt exchange will repay creditors $12.7 billion after its collapse in November 2022. The company’s implosion rocked the crypto market with billions in assets lost.
FTX To Pay Creditors $12.7 Billion
Bankrupt crypto exchange FTX and Alameda Research will pay creditors $12.7 billion after approval by a New York Judge. This follows a settlement after a 20-month lawsuit with the US regulator. The company and its sister firm Alameda agreed to the terms on July 12 while awaiting a judicial sign-off.
While the firm initially sought to repay creditors $8.7 billion before being ordered to pay an additional $4 billion. This does not include civil penalties as the total sum would be used to reinstate creditors. The court further bans both companies from trading crypto assets on behalf of third parties and those involved in digital asset transactions.
“…Cheating or defrauding, or attempting to cheat or defraud, willfully deceiving or attempting to deceive, customers or other persons by, among other things, intentionally or recklessly, in connection with any swap, or contract of sale or any commodity in interstate commerce, or contract for future delivery on or subject to the rules of any registered entity, directly or indirectly.”
Digital asset users have expressed the settlement as a new air following the long-standing bankruptcy dispute.
A 20-Month Dispute Ends
In Nov 2022, FTX announced bankruptcy with allegations of commingling user funds and fraud. This led to creditors and investors being unable to access their assets leading to reduced market sentiment stretching the bear cycle.
Subsequently, financial regulators filed lawsuits against former CEO Sam Bankman-Fried and several company executives as well as Alameda Research. This added to the list of lawsuits against crypto firms. Investigations showed huge purchases of property as well as campaign donations among others. Bankman-Fried was sentenced to 25 years in prison including an $11 billion forfeiture.
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