Cryptocurrency platform FTX to pay $12.7 billion to clients

New York. FTX, which was once the world’s second-largest cryptocurrency exchange until its bankruptcy at the end of 2022, and its investment subsidiary Alameda, will have to pay up to $12.7 billion to their former clients, the US Financial Products Regulatory Authority (CFTC) announced on Thursday.

A federal court in New York ordered both companies to reimburse $8.7 billion to their former customers, as well as an additional $4 billion “to compensate victims for losses caused by the massive fraud orchestrated by Samuel Bankman-Fried (‘SBF’),” the platform’s founder.

According to the CFTC, FTX and Alameda made “false statements to their customers and committed omissions.”

The ruling ended one case against FTX, but lawsuits against four former company executives, including “SBF,” will continue.

Sam Bankman-Fried, co-founder and CEO of FTX, was sentenced on March 28 to 25 years in prison. The court ordered him to pay back $11 billion for one of the largest financial frauds in recent history. Bankman-Fried appealed the sentence.

A fading cryptocurrency guru, he was found guilty by a jury in November of all seven charges brought against him during a trial at the end of which New York prosecutor Damian Williams called for a sentence of between 40 and 50 years in prison.

“SBF” used the assets of its platform clients without consent to carry out risky transactions through its sister company Alameda, in order to purchase real estate or make political donations.

FTX crashed in November 2022 following a massive withdrawal of funds. At the time of its bankruptcy, around nine billion dollars were missing.

In May, liquidators said they expected the amounts recovered from a “wide range of assets” held by FTX and Alameda around the world to be between $14.5 billion and $16.3 billion.

They said that, thanks to this money, all non-governmental creditors would be reimbursed in full and that 98 percent of creditors of a maximum of 50 thousand dollars would receive approximately 118 percent – interest included – of this value established by the court.