FTX, the failed cryptocurrency exchange at the center of disgraced former CEO Sam Bankman-Fried’s fraud, has been ordered to pay customers $12.7 billion.
U.S. District Judge Kevin Castel on Wednesday ordered FTX to pay $8.7 billion in restitution to victims of Bankman-Fried’s fraud, in addition to $4 billion “gains received in connection with the violations.”
Ian McGinley, the division of enforcement director for the Commodity Futures Trading Commission (CFTC), said that this significant sum was the “largest such recovery in CFTC history.”
“FTX’s massive fraud collapsed 21 months ago, and in that time, the CFTC investigated, filed a complaint, and achieved what many thought was impossible at the time of the collapse—a resolution to compensate victims for the losses they suffered,” McGinley explained.
ArsTechnica reported:
FTX could have owed more, but because the CFTC prioritized the speedy repayment of victims, the CTFC “agreed not to seek a civil monetary penalty against FTX” in a related settlement agreement approved by the Bankruptcy Court for the District of Delaware, the CFTC said in a press release celebrating the order.
Restitution comes after Castel found that FTX had violated the Commodity Exchange Act (CEA) and CFTC regulations. His order “imposes injunctions against further violations of the CEA and CFTC regulations, as well as trading and registration prohibitions, and requires FTX and Alameda to cooperate with the CFTC in its ongoing litigation,” the CFTC said.
CFTC chairman Rostin Behnam slammed FTX for using “age-old tactics” to create the “illusion” that assets they purchased on the platform were secure. Behnam said that FTX took advantage of that the fact that “the basic regulatory tools, like governance, customer protections, and surveillance that exist to identify misconduct and ultimately prevent collapse, were simply not there.”
Victims’ attorneys, Adam Moskowitz and David Boies, had dismayed in June that had led many FTX customers “aggrieved and robbed.”
In early November, Bankman-Fried was convicted of five counts of conspiracy and two counts of wire fraud. He was subsequently sentenced to 25 years in prison.
Sean Moran is a policy reporter for Breitbart News. Follow him on Twitter @SeanMoran3.
