BREAKING: FTX and Alameda Hit with $12.7 Billion Payout Order in Final Court Ruling

• A New York judge has approved a $12.7 billion settlement for FTX and Alameda Research creditors, ending a 20-month lawsuit with the CFTC.
• FTX’s proposed reorganization plan includes a 118% return for 98% of creditors with claims under $50,000.

As per the latest development, the New Tork Judge ruled that defunct crypto exchange FTX and its trading firm Alameda Research will pay a staggering $12.7 billion to creditors, thereby putting an end to the 20-month-long lawsuits with the U.S. Commodities and Futures Trading Commission (CFTC).

According to the filing, US District Judge Peter Castel approved the same on Wednesday, August 7. Although the order doesn’t include civil penalties, it bans FTX and Alameda Research from trading cryptocurrencies and acting as intermediaries in the market.

BREAKING: FTX & ALAMEDA FINAL APPROVAL HANDED DOWN, ORDERED TO PAY BACK $12.7 BILLION TO FTX CREDITORS pic.twitter.com/kf3QlJVIuB

— Kyle Chassé (@kyle_chasse) August 8, 2024

In late 2022, crypto exchange FTX filed for bankruptcy, leading to billions of dollars in investors’ losses, as reported by CNF. Later, the commodities regulator CFTC filed a lawsuit against FTX and its sister concern, Alameda Research, alleging that both these players committed fraud by publicizing FTX as a digital commodity asset platform. The CFTC was originally seeking a settlement claim of $52 billion. However, the final settlement was $12.7 billion on Wednesday.

The final settlement value of $12.7 includes $8.7 billion in restitution for those who suffered massive losses along with $4 billion in disgorgement for the gains derived through the violations.

FTX’s Reorganization Plans

The proposed reorganization from FTX includes providing a 118% return for a massive 98% of creditors having claims of under $50,000, based on asset valuations from FTX’s November 2022 bankruptcy filing.

However, many creditors have demanded a cryptocurrency payout, considering the rapid market growth since FTX’s Chapter 11 filing. Until August 6, the creditors will vote on their preferred payout method, with U.S. Bankruptcy Court Judge John Dorsey set to make the final decision on October 7.

As per banking giant JPMorgan, this settlement in cash payment to FTX creditors can fuel further demand in the crypto market.

JPM: “One can find several reasons for institutional investors to remain optimistic [about #bitcoin]:
1. Morgan Stanley has recently allowed its wealth advisors to recommend spot bitcoin ETFs to their clients.
2. The bulk of liquidations of in-kind crypto payments from Mt. Gox… pic.twitter.com/vRxKgyirFU

— matthew sigel, recovering CFA (@matthew_sigel) August 8, 2024

The Bitcoin price has shown a strong recovery after falling to a low of under $50,000. As of press time, it is trading 1.18% up at $58,049 with a market cap of $1.124 trillion. Despite the current volatility, analysts are still confident that the BTC price will surge above $100K by year-end, reported CNF.

On the other hand, banking giant Morgan Stanley has started allowing 15,000 advisors to offer Bitcoin ETFs to their clients, reported CNF.