In a dramatic turn of events for the beleaguered cryptocurrency exchange FTX, a U.S. court has mandated the firm to compensate its customers a staggering $12.7 billion. This ruling, announced by the Commodity Futures Trading Commission (CFTC), marks a significant milestone in the ongoing fallout from FTX’s collapse.
The court’s decision comes after allegations that FTX misled users by presenting itself as a secure venue for cryptocurrency trading while, in reality, it misused their deposits for high-risk ventures. According to CFTC Chairman Rostin Behnam, FTX’s actions constituted a severe breach of trust.
This restitution order is part of a broader settlement between the CFTC and the now-bankrupt exchange. The agreement stipulates that FTX must pay $8.7 billion in restitution and an additional $4 billion in disgorgement. These funds are earmarked to further compensate victims affected by the exchange’s downfall.
FTX has pledged to fully restore customer accounts based on their pre-bankruptcy values. The CFTC has agreed to refrain from collecting any payments from FTX until all customers are compensated, including interest.
The settlement also means that the CFTC’s legal actions will not diminish the funds set aside for customer repayment. FTX’s founder, Sam Bankman-Fried, who was sentenced to 25 years in prison in March for orchestrating an $8 billion theft, is appealing his conviction.
As FTX navigates its bankruptcy, it is engaging with U.S. regulators and selling off assets acquired with misappropriated funds, including real estate and tech investments. The company is currently holding a vote on its bankruptcy plan, with results expected by August 16, and aims to finalize its liquidation strategy by October 7. Some customers are protesting the repayment terms, which are based on the lower cryptocurrency values from November 2022.
