A US court has ordered bankrupt cryptocurrency exchange FTX to pay $12.7 billion in relief to its customers. This order is part of a settlement between the Commodity Futures Trading Commission (CFTC) and FTX. The CFTC and FTX aimed to ensure that the exchange’s customers, who had their deposits frozen during its collapse in late 2022, received compensation.
FTX had attracted customers by creating the impression that it was a safe platform for trading cryptocurrencies. However, it was later revealed that the company had misappropriated customer deposits to fund its high-risk investments, leading to its downfall.
The CFTC, led by Chairman Rostin Behnam, emphasized that this settlement is crucial in holding FTX accountable and providing relief to those affected by its actions.
Under the settlement terms, FTX must pay $8.7 billion in restitution to its customers and an additional $4 billion in disgorgement, which will be used to compensate victims for their losses further.
The settlement also ensures that the CFTC will only collect payments from FTX once all customer claims are fully repaid, including interest. This agreement removes a significant obstacle to the repayment process, as it prevents the government’s lawsuit from diminishing the funds available to FTX’s customers.
FTX has stated that it is committed to providing 100 percent recovery on customer claims based on the value of their accounts at the time of the bankruptcy filing. This repayment plan is part of the broader bankruptcy liquidation process, which includes selling off assets purchased using misappropriated customer funds. These assets include real estate and investments in various technology companies, including those in the cryptocurrency sector.
The court’s order is a critical step in resolving the fallout from FTX’s collapse, but it has not been without controversy. Some customers are dissatisfied with the proposed repayment plan, arguing that it undervalues their claims by basing repayments on the much lower cryptocurrency prices in November 2022.
Despite this opposition, FTX is moving forward with its bankruptcy proposal. Votes on the plan are due by August 16. The company plans to seek the final approval of its wind-down plan on October 7.
The founder of FTX, Sam Bankman-Fried, was found guilty of stealing $8 billion from customers and sentenced to 25 years in prison in March. He has since appealed the conviction. Meanwhile, FTX continues to navigate the complexities of its bankruptcy, reaching settlements with US regulators and former business partners to facilitate the repayment of its customers. The company still needs to respond to requests for comment on the latest developments.
As FTX works to resolve its legal and financial issues, the focus remains on ensuring that its customers receive the compensation they were promised despite the challenges posed by the ongoing bankruptcy proceedings.
