Crypto Exchange FTX Ordered to Pay $12.7 Billion to Customers, According to US CFTC

A U.S. court has mandated bankrupt cryptocurrency exchange FTX to provide $12.7 billion in relief to its customers, according to the Commodity Futures Trading Commission (CFTC).

CFTC Chairman Rostin Behnam stated that FTX attracted customers by creating the impression it was a safe and secure platform for accessing cryptocurrency markets, only to misappropriate customer deposits for its own high-risk investments.

The repayment order implements a settlement reached between the CFTC and FTX as part of its bankruptcy liquidation process, which aims to reimburse customers whose funds were frozen during the company’s collapse in late 2022. FTX has indicated that customers will be fully compensated for their claims based on the value of their accounts at the time of the bankruptcy filing.

This agreement by the CFTC alleviates potential obstacles to the repayment process, ensuring that the government’s lawsuit against FTX won’t diminish the funds available for customers. The CFTC has committed to delaying any payment collection from FTX until all customers have been paid back, including interest.

As part of the settlement, FTX is obligated to pay $8.7 billion in restitution and $4 billion in disgorgement, which will be allocated to further compensate victims who suffered losses during the exchange’s downturn.

FTX has not yet commented on these developments.

The company’s founder, Sam Bankman-Fried, was sentenced to 25 years in prison in March for stealing $8 billion from customers and has since appealed his conviction.

FTX has utilized its bankruptcy status to negotiate settlements with U.S. regulators and former business partners, as well as to liquidate assets acquired with misappropriated customer funds, including real estate and stakes in tech companies.

Currently, FTX is collecting votes on its bankruptcy proposal, although it encounters resistance from some customers who feel dissatisfied with the decision to reimburse them based on significantly lower cryptocurrency prices from November 2022. Votes are due on August 16, and FTX plans to seek final approval for its wind-down plan on October 7.