FTX and CFTC Agree to $12.7 Billion Settlement: Awaiting Court Approval

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FTX and CFTC Agree to $12.7 Billion Settlement

YEREVAN (CoinChapter.com) — The US commodities regulator and bankrupt cryptocurrency exchange FTX have agreed to a $12.7 billion settlement, resolving a 19-month lawsuit. This agreement, subject to court approval, is crucial for FTX’s Chapter 11 reorganization plan.

*Excerpt from FTX’s proposed settlement with the CFTC. Source: Kroll*

FTX and CFTC Finalize $12.7 Billion Settlement to Repay Creditors

FTX and the Commodity Futures Trading Commission (CFTC) have settled for $8.7 billion in restitution and $4 billion in disgorgement. The CFTC did not seek a civil monetary penalty, so the entire $12.7 billion will repay FTX’s creditors.

Senior trial attorney Carlin R. Metzger and FTX’s CEO John J. Ray III highlighted the settlement’s importance.

“The Proposed Settlement is an integral and valuable component of the Debtors’ proposed chapter 11 reorganization plan,”

they said. It resolves ongoing litigation and avoids further delays.

CFTC’s Lawsuit Against FTX and Alameda Settled Amid Bankruptcy Reorganization

The CFTC sued FTX, its former CEO Sam Bankman-Fried, and Alameda Research in December 2022. The lawsuit claimed fraud and misrepresentations in marketing FTX.com as a digital commodity asset platform. This legal battle has been a significant challenge for FTX’s bankruptcy reorganization.

The settlement resolves disputes with one of the largest creditors, mitigating risks and protecting assets for distribution to creditors.

FTX Reorganization Plan Offers High Returns and Cryptocurrency Payout Options

FTX’s reorganization plan promises a 118% return for 98% of creditors, especially those with claims under $50,000.

FTX Creditors to Receive Billions in Cash and Compensation Source: PRNewswire, — *FTX Creditors to Receive Billions in Cash and Compensation. Source: PRNewswire*

This calculation is based on the US dollar value of asset prices at the time of FTX’s bankruptcy filing in November 2022.

Many creditors prefer cryptocurrency payouts, considering the market’s 166% increase in market cap since the bankruptcy filing. This preference could impact final repayment amounts and methods.

FTX Creditors Vote on Payout Methods as Court Decision Looms

A hearing on the settlement is scheduled for August 6 in the Bankruptcy Court for the District of Delaware. Creditors are currently voting on their preferred payout method and have until August 16 to submit their votes. Judge John Dorsey will make a final decision on October 7.

FTX stated,