Cryptocurrency Platform FTX to Pay $12.7 Billion to Fraud Victims

Cryptocurrency exchange FTX has agreed to pay $12.7 billion to investors who lost money when the exchange collapsed in November 2022.

The agreement was approved this week by U.S. District Judge Kevin Castel in the Southern District of New York Negotiated by crypto exchange and Commodity Futures Trading Commission (CFTC)who was charged with fraud. FTX After its collapse.

The permanent injunction order requires the cryptocurrency exchange to pay $8.7 billion in restitution and $4 billion in other items, which will be used to compensate victims of the exchange's actions. Your sufficiency It has been called a “massive coordinated fraudulent scheme” by Samuel Bankman Friedfounder of the stock exchange.

In November 2023, Bankman Fried He was convicted of fraud, conspiracy and money laundering after a month-long trial in New York. He was sentenced to 25 years in prison and ordered to pay $11 million. Other members of Bankman-Fried’s circle pleaded guilty to fraud after FTX and its sister company, Alameda Research, went bankrupt.

““FTX has used outdated tactics to create the illusion that it is a safe place to access cryptocurrency markets,” said the CFTC chairman. Rostin Behnamin a statement on Thursday.

“But the basic regulatory tools, such as governance, customer protection and oversight in place to identify misconduct and ultimately prevent collapse, simply weren’t in place.”

FTX It is now being directed by John G. Ray IIIan attorney who specializes in recovering money from bankrupt companies, such as the collapsed energy trading company Enron.

Castel also found on Wednesday that the exchange had violated commodity exchange lawIt found that the exchange misled investors, presenting itself as a safe place to buy and sell cryptocurrencies, which are volatile and highly speculative assets, while also mixing assets between the exchange and the Alameda hedge fund.

In an agreement relating to Bankruptcy Court for the County of Delawarethe Your sufficiency They agreed not to seek civil penalties against them. FTX.