FTX & Alameda Ordered to Pay $12.7B to Customers

A U.S. judge has ordered FTX and Alameda Research to pay $12.7B to creditors, ending a 20-month lawsuit from the Commodity Futures Trading Commission (CFTC).

What's the scoop?

• Bankruptcy Aftermath: FTX filed for bankruptcy in late 2022, wiping out billions of dollars for investors. The CFTC lawsuit accused FTX and Alameda of fraud and misrepresentation.
• No Civil Penalties: While the order does not include civil penalties — i.e., additional fines on FTX and Alameda Research as punishment — separate from the $12.7B ordered for creditor repayment, it does permanently restrict the trading activities of both companies. 
• Sam Bankman-Fried's Sentence: FTX founder Sam Bankman-Fried has been sentenced to 25 years in prison and ordered to forfeit $11B following his conviction on multiple counts of fraud, conspiracy, and money laundering.

Bankless Take

While opinions remain mixed on whether this redistribution proves bullish, the majority tend to think so, viewing it as a $12.7B liquidity injection to the market. The bull case is that, if markets are in an uptrend when redistributions begin — likely in Q4 — then recipients may want to put their money back into the market. If not, then they most likely won’t. A key bit is that creditors are still deliberating over whether they want repayment to be made in cash or crypto, and have until August 16 to decide.