Court Approves $12.7 Billion Settlement Between FTX and CFTC

U.S. District Judge Peter Castel approved a settlement agreement between the CFTC, FTX, and Alameda Research, under which the exchange and its subsidiary will pay creditors $12.7 billion.

The parties reached an agreement to settle the 20-month-long dispute on July 12. However, the decision awaited final approval, which Judge Castel granted on August 7.

The regulator did not pursue civil penalties; the entire sum will go towards settling FTX’s creditor claims. The defendants agreed to pay $8.7 billion to defrauded investors as restitution and an additional $4 billion as disgorgement of ill-gotten gains.

The court order permanently barred FTX and Alameda from “deceiving or misleading” clients, engaging in transactions involving “digital assets,” and buying or selling them on behalf of third parties.

The CFTC sued FTX’s former CEO Sam Bankman-Fried and Alameda in December 2022, accusing them of fraud and providing false information. The initial claim amounted to $52.2 billion.

Since November 2022, the companies have been undergoing bankruptcy proceedings. The reorganization plan proposed in May 2024 aims to reimburse at least 118% of claims for 98% of FTX’s creditors.

Representatives of the largest group of investors opposed the exchange’s proposal. They argue that the plan limits the recipients’ options and absolves some defendants of liability. Voting on the plan will continue until August 16.

In June, FTX settled a lawsuit with the U.S. Internal Revenue Service for $24 billion.