An American court has ordered the bankrupt cryptocurrency exchange FTX to pay $12.7 billion in compensation to its customers, according to the Commodity Futures Trading Commission (CFTC). FTX attracted customers by presenting itself as a secure platform for accessing cryptocurrency markets, but subsequently misused customer deposits to engage in risky investments, stated CFTC Chair Rostin Behnam in a statement on Thursday.
The repayment order implements a settlement between the CFTC and the bankrupt crypto exchange, which has committed to a liquidation plan that will reimburse customers whose deposits were locked during the collapse at the end of 2022. FTX has indicated that its customers will receive 100% coverage of their claims against the company, based on the value of their accounts at the time it filed for bankruptcy.
The CFTC agreement alleviates a potential obstacle to repayment and ensures that the government’s lawsuit against FTX will not reduce the funds available for customers. The CFTC has agreed not to recover any payments from FTX until all customers have been reimbursed, including interest.
The settlement requires FTX to pay $8.7 billion in restitution and $4 billion in ill-gotten gains, which will be used to further compensate victims for their losses during the exchange’s collapse. FTX has yet to comment on the matter.
Its founder, Sam Bankman-Fried, was sentenced in March to 25 years in prison for stealing $8 billion from customers. He has appealed the ruling. FTX has utilized its bankruptcy to reach settlements with U.S. authorities and former business partners, as well as to sell assets acquired with misappropriated customer funds, including real estate and investments in cryptocurrencies and other technology companies.
FTX is currently in the process of gathering votes on its bankruptcy proposal but is facing resistance from some customers who feel cheated by the decision to reimburse them based on much lower cryptocurrency prices from November 2022. Votes must be submitted by August 16, and FTX plans to seek final approval of its liquidation plan on October 7.