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After months of negotiations, FTX has settled with the US Commodity Futures Trading Commission (CFTC) to the tune of $12.7 billion.
Bankruptcy court documents show that FTX will pay $4 billion in disgorgement fees and $8.7 billion in restitution fees, subject to court approval.
“The Proposed Settlement thus provides much-needed certainty as to the magnitude of the Allowed CFTC Claim and allows these Chapter 11 Cases to move swiftly toward resolution, thereby enabling the prompt distribution to the Debtors’ other creditors and customers,” the court filing read.
FTX's battle with the CFTC dates back to 2022 when the regulator filed a complaint against the exchange, former FTX CEO Sam Bankman-Fried (SBF), and Alameda Research for fraud and for their actions that led to customers losing $8 billion.
"In this bespoke settlement, the CFTC foregoes its own recovery against FTX in order to supplement the recoveries of customers and cryptocurrency lenders beyond the levels typical in chapter 11 cases," said Andy Dietderich, partner at Sullivan & Cromwell and lead counsel for the FTX Debtors.
The exchange's collapse in November 2022 wiped out an estimated $200 billion in crypto market capitalization. SBF has since been sentenced to 25 years in federal prison.
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Almost all FTX account holders are set to receive more than 100% of their original claims according to a reorganization plan submitted by the bankrupt exchange.
FTX disclosed that it amassed approximately $15 billion from liquidating Alameda Research's VC investments. This amount is enough to reimburse 98% of FTX creditors who hold claims of $50,000 or less at a rate of 118 cents on the dollar. Remaining creditors will receive no less than 100 cents on the dollar.
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Last month, Japanese cryptocurrency exchange Bitflyer announced the acquisition of FTX Japan, the Japanese subsidiary of FTX.
FTX Japan, a separate legal entity, was reportedly solvent at the time of FTX's bankruptcy, with its assets exceeding its liabilities. This suggests that FTX Japan users may be able to access their funds once the acquisition by Bitflyer is finalized.
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