US Commodity Commission Orders Crypto Exchange FTX To Pay $12.7 Billion To Customers
US Commodity Commission Orders Crypto Exchange FTX To Pay $12.7 Billion To Customers
The company was accused of misappropriating funds to make risky investments
The United States Commodity Futures Trading Commission (CFTC) has ordered the bankrupt cryptocurrency exchange FTX Trading to pay $12.7 billion in relief to customers.
Rostin Behnam, the CFTC chairman stated, “The company had enticed customers with "an illusion that it was a safe and secure place to access crypto markets." It then misappropriated the deposits to make risky investments.
The repayment order implements a settlement between the CFTC and the bankrupt crypto exchange, which has committed to bankruptcy liquidation. It agreed to repay customers whose deposits were locked during the late 2022 collapse.
FTX has announced that its customers will receive a 100 percent recovery on their claims against the company, based on the value of their accounts when it filed for bankruptcy.
The Commission has resolved the repayment issue and ensured that the government's lawsuit against FTX will not reduce the funds available to its customers. It agreed not to collect any payment from FTX until all its customers were repaid, with interest.
The settlement requires FTX to pay $8.7 billion in restitution and $4 billion in disgorgement. The amount will be used to compensate victims for losses suffered during the collapse of the exchange.
In March, the FTX founder Sam Bankman-Fried was sentenced to 25 years for stealing $8 billion from customers. He has appealed the conviction.
The trading company used its bankruptcy to settle with US regulators and former business partners. It will sell assets purchased with misappropriated customer funds, including real estate and investments in crypto and other tech companies.
The company is soliciting votes on its bankruptcy proposal, facing opposition from some customers who feel short-changed by the decision to repay them based on much lower cryptocurrency prices from November 2022.
Votes are due on 16 August and FTX intends to seek final approval of its wind-down plan on 07 October.
