Alameda and CFTC- New York Judge Greenlights $12.7 Billion Settlement in FTX

Alameda and CFTC- Judge in New York Approves $12.7 Billion Deal Between FTX

Alameda and CFTC- A New York judge has given the final green light for FTX and its sister company Alameda Research to pay back $12.7 billion to FTX creditors, as part of a settlement with the U.S. Commodity Futures Trading Commission (CFTC).

On August 8, U.S. District Judge Peter Castel officially approved the $12.7 billion consent order, ending a 20-month legal battle between FTX, Alameda, and the CFTC. The settlement, initially agreed upon on July 12, was pending court approval, which was finalized on August 7.

Notably, the CFTC chose not to impose a civil monetary penalty, meaning the entire $12.7 billion will be used directly to repay FTX creditors.

FTX and Alameda have committed to returning $8.7 billion to investors defrauded by founder Sam Bankman-Fried and have been ordered to disgorge an additional $4 billion.

The settlement also includes a permanent ban on FTX and Alameda Research from cheating or defrauding commodity customers, engaging in transactions involving digital asset commodities, and from buying or selling digital asset commodities on behalf of third parties. The CFTC, named as the most significant single creditor in FTX’s bankruptcy case, was instrumental in this settlement.

The CFTC filed its lawsuit against FTX, its former CEO Sam Bankman-Fried, and Alameda Research in December 2022, accusing them of fraud and misrepresentation by presenting themselves as a digital commodity asset platform.

The revised FTX reorganization plan promises a 118% return for 98% of its creditors—those with claims under $50,000—based on the asset values at the time of FTX’s bankruptcy filing in November 2022. However, many creditors prefer a cryptocurrency payout, reflecting the roughly 150% increase in the total crypto market cap since FTX’s Chapter 11 filing.

Creditors are currently voting on their preferred payout method, with a deadline of August 16. U.S. Bankruptcy Court Judge John Dorsey will make a final decision on October 7.

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