By LYNAIRE MUNNINGS
Tribune Staff Reporter
lmunnings@tribunemedia.net
THE Commodity Futures Trading Commission (CFTC) announced yesterday that a US District Court in New York has ordered FTX Trading Ltd. and Alameda Research LLC to pay $12.7 billion to their customers and victims of their fraudulent activities.
FTX must pay $8.7 billion in restitution and $4 billion in disgorgement to address the financial losses caused by the scheme led by Samuel Bankman-Fried and his companies. The court found that FTX misled customers and failed to follow regulations by falsely claiming to be a secure platform and improperly mixing customer funds with its own.
Additionally, the bankruptcy court in Delaware has approved a settlement that prevents the CFTC from seeking further penalties from FTX. Instead, FTX’s payments will be directed into a fund to further assist victims, though this plan still requires final approval.
CFTC chairman Rostin Behnam criticised FTX’s false assurances of safety and highlighted the regulatory gaps in the digital asset sector.
“This resolution with FTX is part of our broader enforcement efforts, but it’s just the beginning. Without proper digital asset legislation, entities will continue to exploit regulatory gaps and deceive customers,” Mr Behnam said.
Enforcement director Ian McGinley commended the rapid recovery of funds for victims, calling it the largest such recovery in CFTC history.
The consent order follows a CFTC complaint filed on December 13, 2022, against Sam Bankman-Fried and FTX, which was later updated on December 21, 2022, to include former FTX executives Caroline Ellison and Zixiao “Gary” Wang. The CFTC charged Bankman-Fried with orchestrating the fraudulent scheme involving both FTX and Alameda.
While this ruling resolves the CFTC’s case against FTX, the litigation against Bankman-Fried and the other individuals continues. The CFTC is still pursuing compensation for victims, recovery of ill-gotten funds, civil penalties, and bans on trading and registration.
FTX was headquartered in The Bahamas, taking advantage of the country’s crypto-friendly regulations.
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