The US Commodity Futures Trading Commission (CFTC) and the failed cryptocurrency exchange FTX have reached a $12.7 billion settlement, which is currently pending approval by a Delaware magistrate.
According to a court document submitted on July 12 in the U.S. Bankruptcy Court for the District of Delaware, the agreement is essential for the debtors’ proposed Chapter 11 reorganization plan. The objective of this settlement is to resolve ongoing litigation and disputes with one of the debtors’ largest creditors, thereby avoiding additional litigation costs and delays and reducing the risk of substantial asset reductions available to creditors.
In 2022, the CFTC submitted a complaint against FTX, former CEO Sam Bankman-Fried, and subsidiary Alameda, claiming fraud and customer losses aggregating $8 billion. The agency initially sought $52.2 billion in the settlement.
The CFTC pursued its litigation to guarantee that customer and cryptocurrency creditor recoveries exceeded the typical Chapter 11 case levels, according to Andy Dietderich, a partner at Sullivan & Cromwell and the primary attorney for FTX Debtors.
The settlement includes $8.7 billion in restitution and $4 billion in compensation, with the latter contingent upon the advance payment of all creditor claims. In its Chapter 11 cases, FTX recognized the CFTC as the “single most significant creditor,” emphasizing the substantial liabilities that the debtors were required to bear as a result of the actions and convictions of FTX personnel.
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