Author: Brayden Lindrea, CoinTelegraph; Translated by: Tao Zhu, Golden Finance
Bankrupt cryptocurrency exchange FTX and the United States commodities regulator have agreed to a $12.7 billion settlement, resolving a 19-month-long lawsuit.
A recent document released on July 12 showed that the agreement was reached after months of back-and-forth negotiations and now only needs court approval.
“The proposed settlement is an integral and important component of the Debtors’ proposed Chapter 11 Plan of Reorganization,” said CFTC Senior Trial Attorney Carlin R. Metzger and FTX Chief Executive Officer John. J Ray III.
“It resolves ongoing litigation and disputes with one of the debtor’s largest creditors, avoids the cost and delay of further litigation, and mitigates the significant risk of reduced assets available for distribution to creditors.”
In December 2022, the CFTC sued FTX, its former CEO Sam Bankman-Fried, and FTX’s sister trading firm Alameda Research, claiming that the company committed fraud and made false statements by marketing FTX.com as a platform for digital commodity assets.
The settlement includes $8.7 billion in damages and $4 billion in disgorgement.
The CFTC did not seek civil monetary penalties, with FTX saying: “Given the conduct, guilty pleas, and convictions of FTX insiders, the Debtors face very significant potential liability to the CFTC.”
FTX added that the commodities regulator is the “single most significant creditor” in the Chapter 11 bankruptcy case.
Excerpt from the settlement agreement between FTX and the CFTC. Source: Kroll
A hearing on the settlement is scheduled for Aug. 6 in Delaware Bankruptcy Court.
Based on the dollar value of FTX’s asset prices when it filed for bankruptcy in November 2022, FTX’s proposed restructuring plan would generate a 118% return for 98% of its creditors (those with claims of less than $50,000).
However, many FTX creditors have expressed a desire to be paid in cryptocurrency in kind, which would take into account the 166% increase in market value since FTX filed for bankruptcy.
Creditors are currently voting on how they want to be paid. They have until Aug. 16 to vote, and U.S. Bankruptcy Court Judge John Dorsey is due to make a final decision on Oct. 7.