Crypto exchange FTX and its sister concern Alameda Research are banned from trading digital assets
Sam Bankman-Fried’s defunct cryptocurrency exchange FTX and its affiliate Alameda Research will pay $12.7 billion to creditors following the approval of a consent order by a New York judge. This resolves a long-running lawsuit filed by the Commodity Futures Trading Commission (CFTC), marking a significant development in the collapse of FTX.
In the ruling, United States District Judge Peter Castel did not impose any civil penalties on FTX or Alameda, and the focus was solely on financial restitution. The companies are now prohibited from trading digital assets and serving as intermediaries in the market, effectively ending their involvement in the crypto space. This action is viewed as an effort to prevent further fallout from one of the most dramatic collapses in crypto history.
Crypto exchange FTX collapsed in November 2022 due to its poor balance sheet and liquidity crisis, resulting in a $10 billion fraud committed against customer funds. This had a ripple effect on other crypto companies, throwing them into financial turmoil. Several companies with direct or indirect connections to FTX — including BlockFi, Voyager, Celsius, Genesis, and Gemini — went bankrupt in a matter of weeks. The cryptocurrency market saw its darkest period to date, resulting in a loss of more than $1 trillion, and Bitcoin’s price dropped below $18,000.
The CFTC filed a lawsuit against FTX and Alameda, alleging fraud and misrepresentations in publicizing FTX as a digital commodity asset platform.
Sam Bankman-Fried, co-founder of both crypto exchange FTX and trading firm Alameda Research, was sentenced to 25 years in prison and ordered to forfeit $11 billion in March 2024. He was convicted of seven counts of fraud, conspiracy, and money laundering. The young financier was once the poster boy for the emerging crypto industry before he joined the likes of Bernie Madoff as one of America’s biggest financial fraudsters ever.
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