The now-defunct cryptocurrency exchange FTX and its sister company Alameda Research were ordered to pay US$12.7 million for its customers and fraud victims, the Commodity Futures Trading Commission (CFTC) announced on Thursday.
FTX will pay $8.7 million in restitution and another $4 million to compensate victims of the “massive fraudulent scheme” orchestrated by Sam Bankman-Fried.
Bankman-Fried, who founded FTX and Alameda, was convicted late last year on federal fraud and conspiracy charges related to his role in FTX’s collapse. He was sentenced to 25 years in prison in March.
“Not only is this multibillion-dollar recovery for victims the largest recovery of its kind in CFTC history, but we achieved it with remarkable speed,” CFTC Enforcement Division Director Ian McGinley said in a statement Thursday. .
“FTX’s massive fraud collapsed 21 months ago, and in that time the CFTC investigated, filed charges and achieved what many thought was impossible at the time of the collapse – a resolution to compensate victims for the losses they suffered,” he added.
Following Thursday’s court order, CFTC Chairman Rostin Behnam emphasized the need for legislation on digital assets such as crypto to “fill regulatory gaps.”
“As I’ve been saying for years, this is just the tip of the iceberg,” Behnam said in a statement. “In the absence of digital asset legislation to fill regulatory gaps, entities will continue to operate in the shadows, without these basic tools of sound regulation, honing their deceptive practices and continuing to deceive customers.”
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