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A New York judge has handed down final approval for defunct crypto exchange FTX and its sister trading firm Alameda Research to pay back $12.7 billion to FTX creditors as part of a settlement with the United States Commodity Futures Trading Commission (CFTC).
In an Aug. 7 <a href="https://storage.courtlistener.com/recap/gov.uscourts.nysd.590934/gov.uscourts.nysd.590934.44.0.pdf" target="_blank" rel="noopener nofollow">filing</a>, United States District Judge Peter Castel officially approved the $12.7 billion consent order, which FTX and Alameda entered into to resolve a 20-month-long lawsuit from the CFTC. 
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 <img src="https://s3.cointelegraph.com/uploads/2024-08/8ae8d485-ea4d-45a7-8f45-5d40ee4a31d3.png" alt="NY judge approves $12.7B settlement between FTX, Alameda and CFTC">
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 FTX agreed to pay $12.7 billion to settle a CFTC enforcement action. Source: CourtListener
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FTX and Alameda <a href="https://cointelegraph.com/news/ftx-cftc-reach-settlement-pending-court-approval">first agreed to the settlement</a> on July 12, but the action was still pending final court approval, which District Judge Castel handed down on Aug. 7. 
Notably, the commodities regulator did not seek a civil monetary penalty meaning the entire $12.7 billion sum will be used to pay back FTX creditors directly.
FTX and Alameda agreed to pay back $8.7 billion to investors who were defrauded by founder Sam Bankman-Fried. They were ordered to disgorge an additional $4 billion as well. 
The order will also permanently ban FTX and Alameda Research from “cheating or defrauding” commodity customers, entering into transactions involving “digital asset commodities,” and ban them from ever buying or selling digital asset commodities on behalf of third parties. 
Related: <a href="https://cointelegraph.com/news/tim-walz-accepted-returned-ftx-donation">Gov. Tim Walz accepted — and returned — $4K donation from FTX exec</a>
The <a href="https://cointelegraph.com/news/mark-cuban-cryptocurrency-cftc-regulation-united-states-sec">commodities regulator</a> was named by FTX — which was taken over by bankruptcy expert John Ray III — as the “most significant single creditor" in its ongoing <a href="https://cointelegraph.com/news/chapter-11-bankruptcy">bankruptcy</a> case.
The <a href="https://cointelegraph.com/news/cftc-files-lawsuit-against-sam-bankman-fried-ftx-and-alameda-for-fraud">CFTC sued FTX,</a> its former CEO Sam Bankman-Fried, and Alameda Research in December 2022, claiming the firm committed fraud and made misrepresentations by marketing itself as a “digital commodity asset platform.”
The current version of the proposed FTX reorganization plan will see a <a href="https://cointelegraph.com/news/ftx-plans-full-creditor-pay-back-plus-billions-compensation">118% return for 98% of its creditors</a> — those with claims under $50,000 — based on the US dollar value of asset prices at the time of<a href="https://cointelegraph.com/news/ftx-ftx-us-and-alameda-file-for-chapter-11-bankruptcy-in-us-sbf-resigns"> FTX’s bankruptcy filing</a> in November 2022.
However, many <a href="https://cointelegraph.com/explained/the-alameda-gap-and-crypto-liquidity-crisis-explained">FTX creditors</a> expressed a preference to receive a <a href="https://cointelegraph.com/news/cash-or-crypto-ftx-creditors-vote-how-recovered-funds-paid-back">cryptocurrency payout in-kind,</a> which would factor in the crypto market's roughly 150% increase in total market cap since FTX filed for Chapter 11 protection. 
Creditors are currently voting on how they would prefer to be paid out. They have until Aug. 16 to lodge their requests, and US Bankruptcy Court Judge John Dorsey will make a final decision on Oct. 7.
Magazine: <a href="https://cointelegraph.com/magazine/china-crypto-ban-investors/">How Chinese traders and miners get around China’s crypto ban</a>

NY judge approves $12.7B settlement between FTX, Alameda and CFTC

Cointelegraph

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