US court orders FTX to pay USD 12.7 billion to users

The repayment order follows a bankruptcy liquidation that is set to repay customers whose deposits were locked during FTX’s November 2022 collapse. The downfall was caused by an increase in customer withdrawals that exposed a USD 8 billion hole in FTX’s accounts, with the bankruptcy substantially impacting the crypto markets and affecting other coins, including Bitcoin and Ethereum.

The US court’s current order underlines that FTX violated the Commodity Exchange Act (CEA) and CFTC regulations, which imposed injunctions against further violations and trading and registration prohibitions. This required FTX and its representatives to cooperate with the CFTC in its ongoing litigation. As part of a related settlement agreement approved by the Bankruptcy Court for the District of Delaware, the CFTC permitted not to require a civil monetary penalty against the firm and to subordinate its claims to those of victims of FTX’s fraud scheme. At the time of the announcement, the plan in which payments by FTX towards its CFTC disgorgement obligation to be leveraged to further compensate victims via a supplemental remission fund, is still subject to approval in the bankruptcy proceeding.

In addition, the CFTC agreement is set to settle a potential obstruction to the repayment, ensuring that the authorities’ lawsuit against FTX cannot minimise the funds available to customers. The regulator decided not to collect any payment from the company until all its users are repaid, with interest. As detailed by Reuters, when contacted, FTX did not immediately respond to a request for comment regarding the matter.