FTX has committed to a receivership that will refund customers whose deposits were blocked during the late 2022 meltdown.
A US court has ordered bankrupt cryptocurrency exchange FTX to pay $12.7 billion in aid to its customers, the Commodity Futures Trading Commission said.
FTX lured customers with “the illusion that it was a safe place to access crypto markets” and then misappropriated its customers’ deposits to make its own risky investments, CFTC Chairman Rostin Behnam said in a statement. announced on Thursday.
The refund order implements an agreement between the CFTC and the failed cryptocurrency exchange, which has committed to a receivership that will refund customers whose deposits were blocked during the late 2022 meltdown.
FTX said its customers will receive 100% recovery of their claims against the company, based on the value of their accounts at the time it filed for bankruptcy.
The CFTC settlement resolves a potential obstacle to this reimbursement by ensuring that the government’s lawsuit against FTX will not reduce the funds available to its customers. The CFTC has agreed not to collect any payments from FTX until all of its customers are reimbursed, with interest.
The CFTC settlement requires FTX to pay $8.7 billion in restitution and $4 billion in restitution, which will be used to further compensate victims for losses suffered during the stock market collapse.
FTX did not immediately respond to a request for comment.
Its founder, Sam Bankman-Fried, was sentenced in March to 25 years in prison for stealing $8 billion from customers. He appealed his conviction.
FTX used its bankruptcy to reach agreements with US regulators and former business partners and to sell assets that were acquired with misappropriated client funds, including real estate and investments in crypto and other technology companies.
FTX is currently soliciting votes on its bankruptcy proposal, but is facing opposition from some customers who feel aggrieved by the decision to refund them based on much lower cryptocurrency prices starting in November 2022. The vote is scheduled for 16 August, and FTX intends to seek final approval of its liquidation plan on October 7th.
This story originally appeared on Aljazeera.com read the full story
