US CFTC Orders Fallen Crypto Exchange FTX to Pay $12.7 Billion to Customers

FTX has said that its customers will receive 100 percent recovery on their claims against the company.

By Reuters | Updated: 9 August 2024 12:31 IST

US CFTC Orders Fallen Crypto Exchange FTX to Pay $12.7 Billion to Customers

Photo Credit: Reuters

The repayment order implements a settlement between the CFTC and the bankrupt FTX

Highlights

FTX filed for bankruptcy in November 2022
The defunct crypto exchange has not reacted to the development as yet
FTX founder Sam Bankman-Fried has been sentenced to 25 years in prison

A US court has ordered bankrupt cryptocurrency exchange FTX to pay $12.7 billion (roughly Rs. 1,06,572 crore) in relief to its customers, the Commodity Futures Trading Commission (CFTC) said on Thursday.

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.

The repayment order implements a settlement between the CFTC and the bankrupt crypto exchange, which has committed to a bankruptcy liquidation that will repay customers whose deposits were locked during its late 2022 collapse.

FTX has said that its customers will receive 100 percent recovery on their claims against the company, based on the value of their accounts at the time it filed for bankruptcy.

The CFTC agreement resolves a potential roadblock to that repayment, ensuring that the government's lawsuit against FTX will not reduce the funds available to its customers. The CFTC agreed not to collect any payment from FTX until all its customers are repaid, with interest.

The CFTC settlement requires FTX to pay $8.7 billion (roughly Rs. 72998 crore) in restitution and $4 billion (roughly Rs. 36,079 crore) in disgorgement, which will be used to further compensate victims for losses suffered during the exchange's collapse.

FTX did not immediately respond to a request for comment.

Its founder Sam Bankman-Fried was sentenced in March to 25 years in prison for stealing $8 billion (roughly Rs. 67,127 crore) from customers. He has appealed the conviction.

FTX has used its bankruptcy to reach settlements with US regulators and former business partners and to sell assets that had been purchased with misappropriated customer funds, including real estate and investments in crypto and other tech companies.

FTX is currently soliciting votes on its bankruptcy proposal but faces opposition from some customers who feel short-changed by the decision to repay them based on much-lower cryptocurrency prices from November 2022. Votes are due on August 16, and FTX intends to seek final approval of its wind-down plan on October 7.

(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)

Comments

For the latest tech news and reviews, follow Gadgets 360 on X, Facebook, WhatsApp, Threads and Google News. For the latest videos on gadgets and tech, subscribe to our YouTube channel. If you want to know everything about top influencers, follow our in-house Who'sThat360 on Instagram and YouTube.