Government Orders Crypto Exchange FTX To Pay $12.7Billion To Customers

 

 

A US court has ruled that FTX, a bankrupt cryptocurrency exchange, must pay $12.7 billion in compensation to its affected customers, according to the Commodity Futures Trading Commission (CFTC). 

The CFTC alleged that FTX lured customers with false promises of a secure platform, only to misuse their deposits for risky investments.

It said FTX created an illusion of safety and security, but in reality, it was a house of cards, said CFTC Chairman Rostin Behnam in a statement on Thursday, condemning the exchange’s fraudulent practices.

CFTC Chairman Rostin Behnam criticized FTX for misleading customers by presenting itself as a secure platform while misusing their deposits for risky investments, Al Jazeera reports.

The settlement ensures that customers will recover 100 percent of their claims based on account values at the time of bankruptcy.

 

The agreement stipulates FTX must pay $8.7 billion in restitution and $4 billion in disgorgement to further compensate victims.

The CFTC’s settlement resolves issues that could have reduced the funds available to customers and ensures that no government lawsuit will impact this repayment.

The CFTC will only collect payments after all customer claims are settled with interest.

FTX has not yet responded to the order. Its founder, Sam Bankman-Fried, was sentenced to 25 years in prison in March for embezzling $8 billion from customers, with an appeal pending.

FTX is using its bankruptcy to reach settlements with U.S. regulators and former business partners and to sell assets purchased with misappropriated funds.

The company is seeking votes on its bankruptcy proposal, with final approval of its plan set for October 7. Some customers oppose the repayment terms, which are based on lower cryptocurrency prices from November 2022.