FTX Reaches Agreement with US Commodity Futures Trading Commission to Pay $12.7 Billion to Compensation Affected Users
The Commodity Futures Trading Commission (CFTC) has waived any fines as part of the agreement, with the full amount to be distributed among affected users and investors after the collapse of FTX.
Debtors Agree to Compensate Those Affected by FTX’s Collapse
A judge has yet to review and validate the agreement reached between the parties. The deal aims to settle charges associated with the court dispute and resolve ongoing litigation.
Overview of the Agreement
- FTX agrees to pay $12.7 billion to settle charges associated with the court dispute.
- The CFTC renounces any type of capital as long as the agreed amount is distributed among those affected.
- $8.7 billion will go to compensate affected users, while $4 billion will be subordinated to the prior payment of creditors’ claims.
- The agreement has yet to be approved by a Delaware judge, with a hearing scheduled for August 6.
The agreement follows months of negotiations between FTX and the CFTC, as the bankrupt exchange attempts to resolve its debt obligations and compensate those affected by the collapse.
Background of the Agreement
FTX had agreed to pay a $52 billion settlement to affected parties when the lawsuit was filed in 2022, but the amount was significantly reduced in the current agreement. The exchange has struggled to gain support to relaunch its services since the collapse, with its new management failing to regain the trust of investors and potential users.
Next Steps
A Delaware judge will review and validate the agreement on August 6, following a hearing. If approved, FTX will distribute the compensation funds to affected parties and officially close its services.
FTX and the CFTC Agree to 12.7-Billion Settlement Following Months of Negotiations
FTX’s debtors have reached an agreement with the CFTC, in which the exchange has agreed to pay $12.7 billion to settle charges associated with the court dispute, a report by The Block reveals.
FTX’s representatives have managed to agree on the figure with the CFTC’s representatives, but the agreement still needs approval from a Delaware judge to make the settlement official.
The agreement states that it is an integral component of FTX’s proposed chapter 11 reorganization plan and would resolve ongoing litigation, avoid the cost and delay of further litigation, and mitigate a significant risk of diminishing assets available for distribution to creditors, according to a court filing.
"This is an invaluable agreement," Andy Dietderich, a lawyer representing FTX’s debtors, said, noting that the CFTC is relinquishing any claim to capital as long as the agreed amount is used to compensate users and lenders affected by the exchange’s collapse.
The agreement reduces the original request of $52 billion to $8.7 billion for user compensation, while the remaining $4 billion will be subordinated to the prior payment of creditors’ claims. If approved, FTX will close its services and officially compensate those affected by the collapse.
