FTX has been ordered by the Commodity Futures Trading Commission (CFTC) to pay $12.7 billion to customers and victims of its fraud, marking the largest recovery in CFTC history.
The now-bankrupt FTX and Alameda Research must pay $8.7 billion in restitution and $4 billion in disgorgement. This order follows the sentencing of FTX founder Sam Bankman-Fried to 25 years in prison in March and the sentencing of another executive, Ryan Salame, to seven and a half years in May.
The CFTC found that FTX violated the Commodity Exchange Act (CEA) and CFTC regulations. The order prohibits FTX from trading or holding funds for the purchase or sale of cryptocurrencies. Additionally, FTX and Alameda are required to cooperate with ongoing CFTC litigation.
CFTC Chairman Rostin Behnam stated, “FTX employed outdated tactics to create an illusion of safety in accessing crypto markets. However, fundamental regulatory mechanisms like governance, customer protections, and surveillance that are essential to prevent misconduct and collapse were absent.”
He emphasized that this resolution with FTX aligns with the CFTC’s ongoing enforcement commitments, but warned that without comprehensive digital asset legislation to fill regulatory gaps, entities will continue to operate in the shadows, increasing the likelihood of deceptive practices targeting customers.
Ian McGinley, director of the CFTC’s division of enforcement, highlighted the significance of this recovery, noting, “This multi-billion dollar settlement for victims is the largest in CFTC history, achieved in remarkable time. The collapse of FTX’s massive fraud occurred 21 months ago, and during this period, the CFTC successfully investigated and filed a complaint, ultimately reaching a resolution to compensate victims for their losses. I commend our Chicago-based team for their dedicated efforts on behalf of FTX’s victims.”