August 8 – A U.S. court has mandated that the bankrupt cryptocurrency exchange FTX pay $12.7 billion in restitution to its customers, according to the Commodity Futures Trading Commission (CFTC) on Thursday.
The CFTC Chairman, Rostin Behnam, stated that FTX misled customers by presenting itself as a secure platform for accessing crypto markets, only to misappropriate their deposits for risky investments.
The repayment order follows a settlement between the CFTC and FTX, which has agreed to a bankruptcy liquidation plan to return funds to customers whose deposits were frozen during its collapse in late 2022.
FTX has promised that customers will recover 100% of their claims based on the account values at the time of bankruptcy.
The CFTC settlement addresses a potential obstacle to repayment by ensuring that the government’s lawsuit against FTX will not diminish the funds available to customers. The CFTC has agreed to delay collecting any payments from FTX until all customer claims are satisfied, including interest.
Under the settlement, FTX is required to pay $8.7 billion in restitution and $4 billion in disgorgement, which will further compensate victims for their losses during the exchange’s downfall.
FTX has yet to comment on the matter.
Sam Bankman-Fried, the founder of FTX, was sentenced to 25 years in prison in March for embezzling $8 billion from customers. He has filed an appeal against his conviction.
FTX has used its bankruptcy to negotiate settlements with U.S. regulators and former business partners, and to sell assets acquired with misappropriated funds, including real estate and investments in crypto and technology companies.
Currently, FTX is seeking votes on its bankruptcy plan but faces resistance from some customers who are dissatisfied with the decision to repay based on significantly lower cryptocurrency prices from November 2022. Voting is set to conclude on August 16, with FTX aiming for final approval of its liquidation plan on October 7.
