FTX settlement overview:
- Who: A New York federal judge approved a $12.7 billion consent order over claims by the U.S. Commodity Futures Trading Commission that Samuel Bankman-Fried, FTX Trading Ltd. and Alameda Research defrauded customers.
- Why: The Alameda settlement will compensate the allegedly defrauded customers and prohibit the defendants from defrauding commodity customers in the future.
- Where: The Alameda settlement was filed in New York federal court.
A New York federal judge has approved a $12.7 billion FTX settlement over claims Samuel Bankman-Fried, FTX Trading Ltd. and affiliated trading firm Alameda Research defrauded commodity customers, Law360 reports.
U.S. District Judge P. Kevin Castel approved the consent order, which sets a permanent injunction prohibiting FTX and Alameda from “cheating or defrauding” commodity customers, from making transactions involving digital asset commodities and from buying or selling digital asset commodities for other parties.
Bankman-Fried allegedly facilitated a scheme to defraud FTX customers by diverting funds to Alameda. Former FTX executives reportedly took plea deals for the part they played in the fraud in exchange for testifying against the FTX founder.
Alameda settlement resolves U.S. Commodity Futures Trading Commission lawsuit
The FTX settlement will require the defendants to pay $8.7 billion to customers allegedly defrauded by Bankman-Fried and disgorge an additional $4 billion for gains attained due to the alleged fraud.
The order notes the defendants will receive a “dollar-for-dollar credit” against the restitution obligation for money distributed in its bankruptcy proceedings in satisfaction of customers’ or U.S. Commodity Futures Trading Commission claims.
FTX entered Chapter 11 bankruptcy in November 2022 after its lending relationship with Alameda was discovered and customers scrambled to withdraw money, causing the platform to collapse.
The U.S. Commodity Futures Trading Commission filed the amended FTX lawsuit in December 2022 shortly after prosecutors charged Bankman-Fried with fraud. The U.S. Securities and Exchange Commission filed a similar enforcement action against Bankman-Fried and FTX in December 2022. That action is pending.
Earlier this year, Bankman-Fried was sentenced to 25 years in prison and ordered to pay $11 billion for his role in the FTX fraud.
What do you think about the $12.7 billion FTX settlement? Tell us your thoughts in the comments.
The Commodity Futures Trading Commission is represented by Carlin Metzger, Nina Ruvinsky, Elizabeth N. Pendleton and Robert T. Howell.
The FTX lawsuit is Commodity Futures Trading Commission v. Samuel Bankman-Fried, et al., Case No. 1:22-cv-10503-PKC, in the U.S. District Court for the Southern District of New York.
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2 thoughts onFTX, Alameda Research to pay $12.7B in fraud settlement
Thank you ! I received a check yesterday at work from chainabuse claim settlement. That was faster than expected .
They tried to “ fry “ my money too. God used ChainAbuse rightly against them for me . I reported to their cybercrime security team via Chainabuse @duck COM with details of my dealings with FTX and got a case #. Money was recovered via ETH into my trustwallet.