Now-defunct cryptocurrency exchange FTX and its sister company Alameda Research Ordered to pay $12.7 million The Commodity Futures Trading Commission (CFTC) announced the measures on Thursday to customers and victims of fraud.
FTX will pay $8.7 million in damages and an additional $4 million to compensate victims of a “massive fraud scheme” orchestrated by Sam Bankman Freed.
Bankman Freed, the founder of both FTX and Alameda, was convicted of federal fraud and conspiracy charges for his role in FTX’s collapse late last year and was sentenced to 25 years in prison in March.
“This multi-billion-dollar recovery to victims is not only the largest recovery in CFTC history, but it was achieved with remarkable speed,” CFTC Enforcement Director Ian McGinley said in a statement Thursday.
“The FTX fraud scandal occurred 21 months ago, during which the CFTC investigated, filed complaints, and achieved something that many thought was impossible at the time: compensation for victims’ losses,” he added.
Following Thursday’s court order, CFTC Chairman Rostin Behnam stressed the need for legislation on digital assets like cryptocurrencies to “fill regulatory gaps.”
“As I have said for years, this is just the tip of the iceberg,” Benham said in a statement. “Without a Digital Assets Act that closes the regulatory gap, companies will continue to operate in the shadows, ramping up their deceptive practices and continuing to rip-off customers without basic sound regulatory measures.”
