A judge has approved a $12.7 billion settlement between the Commodity Futures Trading Commission (CFTC) and FTX, the defunct crypto exchange founded by convicted fraudster Sam Bankman-Fried. The settlement requires FTX to pay $8.7 billion in restitution and $4 billion in disgorgement to compensate defrauded customers of the failed exchange.
The consent order, filed on Aug. 8 at the U.S. District Court for the Southern District of New York, was approved and signed by John Ray, the CEO of FTX appointed to manage the recovery of assets from the collapsed company. In a statement, the CFTC described the scheme as a “massive fraudulent scheme” orchestrated by Bankman-Fried, his bankrupt FTX group of companies, and a group of FTX insiders.
Bankman-Fried was sentenced to 25 years in prison for defrauding investors of $8 billion through his failed crypto platform. The court found that FTX customers lost $8 billion, equity investors lost $1.7 billion, and lenders to the Alameda Research hedge fund lost $1.3 billion.
The settlement also imposes injunctions against FTX, prohibiting the company from holding or trading digital asset commodities unless it’s for winding up entities owing money in the bankruptcy proceeding. FTX is currently going through the bankruptcy process, settling legal disputes, selling assets, and seeking approval from creditors and customers for its final wind-down plan.
Customers are being repaid based on cryptocurrency prices from November 2022, with FTX assuring 100 percent recovery of their claims against the company. Please rewrite this sentence.
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