It has been 20 months since the Commodity Futures Trading Commission (CFTC) filed a complaint against Sam Bankman-Fried, FTX, and its sister company, Alameda Research. Also, FTX and Alameda have been banned by the court from trading digital assets and acting as intermediaries in the market.
The CFTC claimed that both companies committed fraud and misrepresentations by publicizing the defunct crypto exchange FTX as the digital commodity asset platform.
FTX and Alameda ordered to pay $12.7B in disgorgement and restitution to victims of FTX’s fraud.
On 8 August 2024, the independent federal regulatory agency tasked with overseeing the U.S derivatives markets, CFTC, obtained a multi-billion judgment against FTX and Alameda. According to a Thursday press release by CFTC, a New York judge “entered a consent order of permanent injunction and other equitable relief against FTX.”
This marks the end of the lawsuit against the company.
However, CFTC’s suit against Bankman-Fried and three other individual defendants remains active.
To compensate FTX customers and victims of the massive fraudulent scheme orchestrated by Bankman-Fried and his cohorts, the Court has ordered the defunct exchange to pay a total of $12.7 billion in restitution and disgorgement.
The court filing read, “FTX Trading and Alameda shall pay, jointly and severally, restitution of Eight Billion Seven Hundred Million Dollars ($8,700,000,000) (“Restitution Obligation”) to persons who sustained losses proximately caused by the violations of the Act and Regulations described in the amended complaint and this consent order.”
“FTX Trading and Alameda shall pay, jointly and severally, disgorgement of four billion dollars ($4,000,000,000) (“Disgorgement Obligation”) for gains received in connection with the violations described in the amended complaint and this consent Order,” it added.
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According to the CFTC, payments by FTX towards its disgorgement obligation will be used to further compensate victims through a supplemental remission fund.
While the CFTC agreed not to seek a civil monetary penalty against FTX in a related settlement agreement approved by a Delaware bankruptcy court, Judge Peter Castel’s consent order bans FTX and Alameda from trading digital assets and acting as intermediaries in the market.
The Largest Recovery for Victims in the history of the CFTC
Ian McGinley, the Division of Enforcement director, celebrated the development, noting that it is the largest recovery for victims in the history of the CFTC. “What many thought was impossible at the time of the collapse, we achieved it with remarkable speed,” he commented.
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Notably, this lawsuit was initiated in December 2022, following the FTX implosion in November 2022 and bankruptcy filing. The collapse of the one-time second-largest crypto exchange left many investors counting significant losses. It wiped out billions of dollars from the crypto market, triggering a bear season. As a result, FTX founder Bankman-Fried was later sentenced to 25 years in prison. SBF was found guilty on seven counts of fraud, including the commingling and misappropriation of customer funds.
This judgment has come just a few days after the final judgment over the status of XRP in the suit filed by the U.S Securities and Exchange Commission.
Read also: U.S SEC’s XRP lawsuit against Ripple finally over.
Image source: Pymnts
Ndianabasi Tom A crypto journalist and content writer who has been talking about cryptocurrency and blockchain technology since 2018, Ndianabasi is a Writer at Crypto Asset Buyer (CAB).
