FTX and CFTC Reach $12.7 Billion Settlement Agreement

The bankrupt cryptocurrency exchange FTX and the CFTC have reached a $12.7 billion settlement following months of negotiations, as reported by The Block.

Back in 2022, the CFTC accused former FTX CEO Sam Bankman-Fried and the affiliated Alameda Research of actions that led to customer losses of $8 billion. Initially, the agency pursued a claim of $52.2 billion.

However, under the agreement, the CFTC has waived its claims as long as FTX adheres to its reorganization plan. Consequently, the exchange will pay creditors up to $12.7 billion, contingent on available funds.

The settlement includes $8.7 billion in restitution and $4 billion in penalties. The latter amount is deferred until all creditor claims are settled.

Court documents describe the CFTC as the “most significant creditor” in the Chapter 11 bankruptcy proceedings.

“Given the conduct, guilty pleas, and convictions of FTX employees, the debtors bear a very substantial potential liability to the CFTC,” the statement reads.

A hearing on the settlement motion is scheduled for August 6.

FTX filed for bankruptcy at the end of 2022.

In May 2024, the exchange proposed a new compensation plan, under which 98% of creditors would receive at least 118% of their claims. The company forecasts total compensation to range from $14.5 billion to $16.3 billion.

Representatives of the largest group of creditors opposed the exchange’s proposal. They argue that the plan limits recipients’ options and absolves some defendants of liability. A vote on the plan is set to occur by August 16.

Previously, FTX settled a $24 billion claim with the U.S. Internal Revenue Service.