FTX ordered to pay $12.7 billion in massive crypto fraud case
Sam Bankman-Fried, the founder of FTX, was sentenced in March to 25 years in prison for stealing $8 billion from customers
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A court has ordered bankrupt cryptocurrency exchange FTX to pay $12.7 billion in monetary relief to its customers, the Commodity Futures Trading Commission announced on Thursday.
The settlement resolves the commission’s litigation, which requires FTX to pay $8.7 billion in restitution and $4 billion in disgorgement to the victims whose deposits were locked during the 2022 collapse.
FTX drew customers in with “an illusion that it was a safe and secure place to access crypto markets,” then misappropriated their customer deposits to make its own risky investments, CFTC Chairman Rostin Behnam said in a statement, according to Reuters.
In a related settlement approved by the Bankruptcy Court for the District of Delaware, the commission agreed not to seek a civil monetary penalty against FTX, the Wall Street Journal reported.
The settlement comes months after FTX founder Sam Bankman-Fried was sentenced in March to 25 years in prison for stealing $8 billion from customers.
Bankman-Fried was once known as the “King of Crypto” and became a billionaire who appeared on the covers of magazines and brokered lucrative deals with celebrities to promote his company.
At its height, FTX was worth $32 billion and had a million users. Bankman-Fried was considered somewhat of an anomaly in the world of crypto, both for his age, 32, and his intention to use his wealth for altruistic purposes.
The empire came crashing down in November 2022 when a CoinDesk report revealed that most of FTX’s assets were held by a quantitative trading company that Bankman-Fried also ran called Alameda Research.
The revelation sent investors and customers scrambling to withdraw their funds, which later exposed an $8 billion hole in the company.
As quickly as FTX grew, it fell – becoming essentially bankrupt overnight.
FTX is currently soliciting votes on its bankruptcy proposal, Reuters reported. Votes are due on August 16.