Months of negotiations between FTX and the CFTC ended, with both parties agreeing on a $12.7 billion settlement

FTX and the US commodities regulator have agreed to a $12.7 billion settlement to resolve a 19-month-long lawsuit.

The agreement follows extensive negotiations and now awaits court approval, as per a July 12 filing.

A hearing on the settlement is scheduled for August 6 in the Bankruptcy Court for the District of Delaware. Judge John Dorsey will make a final decision on October 7.

CFTC Lawsuit

In December 2022, the CFTC sued FTX, former CEO Sam Bankman-Fried, and Alameda Research for fraud and misrepresentation, alleging $8 billion in customer losses.

Carlin R. Metzger from the CFTC and FTX’s CEO John J. Ray III highlight the settlement's importance for FTX’s chapter 11 reorganization plan. It resolves ongoing litigation, avoids further legal costs, and protects assets for creditors.

The settlement includes $8.7 billion in restitution and $4 billion in disgorgement. The CFTC did not seek a civil monetary penalty, acknowledging FTX’s substantial liability.

FTX follows creditor repayment opinions

FTX’s proposed reorganization plan offers a 118% return for 98% of creditors with claims under $50,000, based on asset prices at the time of bankruptcy in November 2022.

Many creditors prefer cryptocurrency payouts, reflecting a 166% market cap increase since FTX’s bankruptcy filing. Creditors are voting on their preferred payout method until August 16.