US Judge Orders FTX and Alameda To Pay Creditors $12.7B In CFTC Settlement

by

As a seasoned researcher with years of experience in the ever-evolving world of finance and cryptocurrencies, I find myself intrigued by this recent development between FTX, Alameda Research, and the CFTC. The $12.7 billion settlement approved by a US Judge is indeed a significant step towards restoring faith in the crypto market after the tumultuous events of November 2022.

A U.S. Judge has given the green light to an agreement between the defunct cryptocurrency platform FTX, its sister firm Alameda Research, and the Commodity Futures Trading Commission (CFTC). The bankrupt company is now required to pay back approximately $12.7 billion to creditors following its fall in November 2022. This collapse had a significant impact on the crypto market, resulting in massive losses of assets. In simpler terms, after the downfall of FTX last year, they will repay their creditors around $12.7 billion as part of an agreement approved by a U.S. Judge, and this event caused great financial instability within the cryptocurrency market.

FTX To Pay Creditors $12.7 Billion 

After a judge’s approval, the bankrupt cryptocurrency exchange FTX and its affiliated company Alameda Research plan to distribute approximately $12.7 billion to their creditors. This agreement is part of a settlement reached following a 20-month legal battle with U.S. regulatory authorities. The terms were agreed upon by both companies on July 12, pending the judge’s final approval.

Initially, the company aimed to repay a debt of $8.7 billion, but later was instructed to pay an extra $4 billion. This amount doesn’t include fines. Instead, it will be used to reimburse creditors. Moreover, the court prohibits both companies from facilitating crypto asset trades for third parties and engaging in any digital asset transactions.

“Engaging, attempting to engage, or even planning to engage in dishonest practices such as deceiving or trying to deceive customers or other individuals, through methods like intentionally or negligently manipulating swaps, sales contracts, commodities traded across states, or future delivery contracts subject to exchange rules.”

Users of digital assets consider the recent settlement as a fresh breeze after years of ongoing bankruptcy disagreement.

A 20-Month Dispute Ends

Back in November 2022, FTX declared bankruptcy amid accusations of mixing user funds and fraudulent activities. Consequently, this made it impossible for creditors and investors alike to reach their assets, which significantly dampened market confidence and prolonged the ongoing bear market. As a crypto investor, I found myself grappling with these developments, and I’m sure many others did too.

Afterward, financial authorities filed multiple lawsuits against Sam Bankman-Fried (former CEO), several top executives, and Alameda Research. This brought the total number of legal actions against crypto companies. The investigations revealed significant real estate purchases, campaign contributions, and other expenses. Eventually, Bankman-Fried was given a 25-year prison sentence and ordered to forfeit $11 billion.

Ripple Ordered To Pay $125Mln Penalty In SEC Lawsuit

Read More

2024-08-08 12:14