- FTX and CFTC have reached a $12.7 Billion settlement.
- The crypto exchange will pay $8.7 Billion in restitution and $4 Billion to customers.
As a seasoned researcher who has witnessed the rise and fall of numerous digital assets and exchanges, I must say that the $12.7 billion settlement between FTX and CFTC is both a historical milestone and a stark reminder of the challenges in this dynamic industry.
Following approximately two years of courtroom disputes between cryptocurrency platform FTX and the Commodity Futures Trading Commission (CFTC), they have ultimately agreed upon a resolution.
In 2022, FTX faced financial ruin due to high-risk ventures that used client funds, which ultimately resulted in bankruptcy and ongoing disputes with American regulatory bodies.
FTX’s $12.7B settlement with CTFC
Following the resolution of the dispute, FTX agrees to compensate affected parties with a total of $12.7 Billion. This includes $8.7 Billion in restitution and $4 Billion for customers whose funds were frozen post-bankruptcy.
In CFTC’s statement, Chairman Rostin Behnam stated,
“FTX attracted clients by giving the impression that it offered a reliable and secure platform for cryptocurrency trading, only to later use those client funds in high-risk investment ventures.”
Consequently, the court order enforces a complete resolution between the CFTC and the cryptocurrency exchange.
The crypto exchange has already agreed to go through bankruptcy proceedings, which means it will distribute payments to customers whose funds are still held by the exchange, making a path for these repayments.
On X, previously known as Twitter, Lookonchain provided clarity about the financial status of FTX and Alameda. Specifically, they mentioned…
“On August 8th, Alameda added 205,380 WLD (equivalent to $351K) to Binance. As of now, both FTX and Alameda jointly manage assets worth approximately $630 million. This includes 266.85 million FTT ($344.24M), 105.47 million BIT ($113.26M), 24.8 million WLD ($43.64M), 104 million STG ($32.6M), and 145.97 million BOBA ($29.83M).”
According to FTX, all customers will receive 100% of their claims based on the 2022 accounts value.
Essentially, the CFTC won’t demand any payment from the company until every customer has been completely reimbursed, including accrued interest.
FTX collapse and bankruptcy
In November 2022, FTX sought protection under Chapter 11 of U.S. bankruptcy law. Following this filing, Sam Bankman-Fried relinquished his role as CEO.
Based on the bankruptcy documents, the company reported over 100,000 different creditors, total assets valued between $10 billion and $50 billion, as well as outstanding debts.
At its peak, the value of the cryptocurrency exchange reached an impressive $32 billion, boasting over a million active users. Regrettably, this thriving platform crumbled following the disclosure that the majority of its assets were controlled by Alameda Research, a closely related firm.
As a researcher uncovering this information, I found myself faced with an unsettling situation. Upon disclosing the discovery that our company had mishandled approximately $8 billion of customer investments, a wave of investors understandably sought to withdraw their funds. However, it became apparent in the ensuing chaos that the true extent of the mismanagement had not been fully grasped beforehand.
These events caused the company to crumble, thus becoming bankrupt overnight.
Read More
- DYM PREDICTION. DYM cryptocurrency
- ZK PREDICTION. ZK cryptocurrency
- CYBER PREDICTION. CYBER cryptocurrency
- JASMY PREDICTION. JASMY cryptocurrency
- POPCAT PREDICTION. POPCAT cryptocurrency
- SKEY PREDICTION. SKEY cryptocurrency
- TURBO PREDICTION. TURBO cryptocurrency
- Top gainers and losers
- BNB PREDICTION. BNB cryptocurrency
- XRP PREDICTION. XRP cryptocurrency
2024-08-09 13:43