FTX Reaches $12.7 Billion Settlement with CFTC Amid Bankruptcy Proceedings
FTX, the bankrupt cryptocurrency exchange, has reached a $12.7 billion settlement with the U.S. commodities regulator, ending a lengthy legal battle that began 19 months ago.
The agreement, subject to court approval, was detailed in a July 12 filing and is a crucial part of FTX’s Chapter 11 reorganization plan.
According to senior trial attorney Carlin R. Metzger of the Commodity Futures Trading Commission (CFTC) and FTX CEO John J. Ray III, the settlement resolves ongoing litigation and disputes with one of FTX’s largest creditors. It aims to avoid further legal costs and delays, as well as safeguard assets for distribution to creditors.
The lawsuit, filed in December 2022, accused FTX, its former CEO Sam Bankman-Fried, and sister company Alameda Research of fraud and misrepresentation regarding FTX.com as a digital commodity asset platform.
READ MORE: Hong Kong Adds Seven Crypto Exchanges to Alert List Amid Regulatory Crackdown
The settlement includes $8.7 billion in restitution and $4 billion in disgorgement, with no civil monetary penalty sought by the CFTC, citing the severity of FTX insiders’ conduct, guilty pleas, and convictions.
FTX identified the CFTC as its primary creditor in the Chapter 11 bankruptcy case, emphasizing the substantial liabilities it faces.
A hearing on the settlement is scheduled for August 6 in the Bankruptcy Court for the District of Delaware. FTX’s reorganization plan proposes a 118% return for 98% of creditors with claims under $50,000, based on asset values at the time of bankruptcy. Creditors have until August 16 to vote on receiving payments, including cryptocurrency payouts reflecting the market’s 166% cap increase since FTX’s bankruptcy filing, before a final court decision on October 7 by Judge John Dorsey.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
