The defunct exchange FTX, once operated by the disgraced convict Sam Bankman-Fried, has settled with the Commodity Futures Trading Commission (CFTC) for a whopping .7 billion. This development comes after the lawsuit, filed by the CFTC, played out for 19 months. While both parties have agreed to the number, the court’s approval remains. “The Proposed Settlement is an integral and valuable component of the Debtors’ proposed chapter 11 reorganization plan,” Carl R Metzger, senior trial attorney for the CFTC, mentioned alongside FTX’s bankruptcy CEO, John J Ray III. The statement continued, “It resolves ongoing litigation and disputes with one of the largest creditors of the Debtors, avoids the cost and delay of further litigation, and mitigates a significant risk of diminution of the
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The defunct exchange FTX, once operated by the disgraced convict Sam Bankman-Fried, has settled with the Commodity Futures Trading Commission (CFTC) for a whopping $12.7 billion. This development comes after the lawsuit, filed by the CFTC, played out for 19 months. While both parties have agreed to the number, the court’s approval remains.
“The Proposed Settlement is an integral and valuable component of the Debtors’ proposed chapter 11 reorganization plan,” Carl R Metzger, senior trial attorney for the CFTC, mentioned alongside FTX’s bankruptcy CEO, John J Ray III. The statement continued, “It resolves ongoing litigation and disputes with one of the largest creditors of the Debtors, avoids the cost and delay of further litigation, and mitigates a significant risk of diminution of the assets available for distribution to creditors.”
The CFTC’s lawsuit was brought in 2022, suing FTX and sister firm Alameda Research for committing fraud and wrongly marketing FTX.com as a digital commodities asset platform, which misled investors. As the lawsuit concludes, the settlement terms include FTX paying $8.7 billion in restitution and $4 billion in disgorgement.
“Given the conduct, guilty pleas and convictions of the FTX Insiders, the Debtors face very substantial potential liability to the CFTC,” FTX stated. The District Court of Delaware will conduct a hearing on the settlement and repayment on August 6.
The repayment plan for FTX’s defrauded users will look to refund 118% of the funds lost to 98% of the investors, who held less than $50,000. They will receive the funds in US dollars, the value based on what their assets were worth when FTX filed for bankruptcy. Many creditors have requested their repayments in crypto and the funds to factor in the tremendous rise the digital assets’ market cap has witnessed since 2022.
Creditors are now voting on how they want to receive what is owed to them. They have time until August 16, and the final decision will come on October 7.