The U.S. Commodity Futures Trading Commission (CFTC) recently achieved a landmark victory. The U.S. District Court for the Southern District of New York has granted a permanent injunction and other relief requiring FTX Exchange and its affiliate Alameda Research to pay a total of $12.7 billion to compensate victims who suffered losses due to the company’s fraudulent practices.

Court orders $12.7 billion in damages

The amount covers compensation and illegal income recovery

The CFTC announced that the U.S. District Court for the Southern District of New York recently entered a permanent injunction and other equitable relief order against FTX Exchange and its affiliate Alameda Research. The court ordered the companies to pay $12.7 billion, including $8.7 billion in damages and $4 billion in disgorgement, which will be used to further compensate victims. The primary purpose of these measures is to recoup the losses suffered by former FTX customers as a result of a massive fraud scheme orchestrated by the company’s founder, Samuel Bankman-Fried (SBF), and his core team.

FTX violates the Commodity Exchange Act

Victims will receive further compensation

The court found that FTX violated the Commodity Exchange Act (CEA) and CFTC regulations. Under the order, FTX and Alameda must cooperate with the CFTC in its ongoing litigation. Additionally, the court noted that FTX made material misrepresentations to customers during its operations, including claiming that its platform was “the safest and most convenient way to buy and sell cryptocurrency,” when in fact customer funds were commingled and improperly misappropriated. .

Related Settlement and Future Plans

Bankruptcy court approves CFTC not to seek fines, prioritizes victims' claims

In a related settlement, the Delaware Bankruptcy Court granted the CFTC’s request not to seek civil penalties against FTX and to give priority to its monetary claims to those of the victims. Disgorgement payments by FTX will be further used to compensate victims, according to a reorganization plan filed by FTX in bankruptcy proceedings. The plan still needs to be approved in bankruptcy proceedings.

CFTC’s position

Chairman calls for legislation to fill regulatory gaps

CFTC Chairman Rostin Behnam said FTX used traditional fraud techniques to create a seemingly safe and reliable cryptocurrency market. But in reality, basic regulatory tools, such as governance, customer protection and supervisory measures, simply do not exist. He noted that while this settlement represents a significant development, in the absence of digital asset legislation to fill regulatory gaps, businesses will continue to operate in the shadows, thereby exacerbating their deceptive practices and continuing to mislead customers.

The agreement order resolves the CFTC's lawsuit against FTX, which remains ongoing against four individual defendants, including SBF. In the ongoing litigation, the CFTC seeks to recover damages for victims, disgorgement of disgorgement, civil penalties, a permanent ban on trading and registration, and a permanent ban on further violations of the Commodity Exchange Act and CFTC regulations.

This article CFTC Obtains $12.7 Billion Judgment Against FTX and Alameda, Fines Used to Compensate Victims appeared first on Chain News ABMedia.