FTX assures its customers will receive full recovery on their claims against the company
A US court has directed the bankrupt cryptocurrency exchange FTX to pay £12.7 billion in compensation to its customers, according to the Commodity Futures Trading Commission (CFTC) on Thursday.
FTX attracted customers by creating an "illusion of being a safe and secure platform for accessing crypto markets," only to then misappropriate customer deposits for its own risky investments, stated CFTC Chairman Rostin Behnam.
The repayment order enforces a settlement between the CFTC and the bankrupt crypto exchange, which has committed to a bankruptcy liquidation aimed at reimbursing customers whose deposits were frozen during its collapse in late 2022.
FTX has assured that its customers will receive full recovery on their claims against the company, based on the value of their accounts at the time of its bankruptcy filing.
The CFTC agreement eliminates a potential obstacle to this repayment, ensuring that the government's lawsuit against FTX will not diminish the funds available to its customers. The CFTC has agreed to refrain from collecting any payment from FTX until all customers are fully repaid, with interest.
As part of the settlement, FTX is required to pay £8.7 billion in restitution and £4 billion in disgorgement, the latter of which will be used to further compensate victims for losses incurred during the exchange's collapse.
FTX founder Sam Bankman-Fried was sentenced in March to 25 years in prison for misappropriating £8 billion from customers. He has since appealed the conviction.
FTX has utilised its bankruptcy proceedings to reach settlements with US regulators and former business partners and to sell assets acquired with misappropriated customer funds, including real estate and investments in cryptocurrency and other technology companies.
FTX is currently seeking votes on its bankruptcy proposal but is facing 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.
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