Langgam Pos - The US court has ordered the bankrupt cryptocurrency exchange, FTX, to pay $12.7 billion, approximately IDR 202.3 trillion, in compensation to its customers. This decision comes as the Commodity Futures Trading Commission (CFTC) issued a formal request for the payment on August 8th.
According to Channel News Asia, CFTC Chairman Rostin Behnam stated, "FTX lured customers with the illusion that it was a safe and secure place to access the crypto market, only to misuse their deposits for risky investments."
The court's order enforces a settlement between the CFTC and the collapsed exchange, which has committed to liquidating its assets and reimbursing customers whose funds were locked during the company's collapse at the end of 2022.
FTX has already pledged that its customers will receive a 100 percent recovery on their claims, based on their account values at the time of bankruptcy.
The settlement with the CFTC addresses potential obstacles to the reimbursement process, ensuring that the government’s lawsuit against FTX will not diminish the funds available for customers.
The CFTC has agreed not to collect any payments from FTX until all its customers are repaid. The settlement requires FTX to pay $8.7 billion (IDR 138.5 trillion) in damages and $4 billion (IDR 63.7 trillion) in refunds, which will further compensate victims for losses incurred during the exchange’s collapse.
FTX founder Sam Bankman-Fried was sentenced to 25 years in prison in March 2024 for stealing $8 billion from customers. He has appealed the verdict.
SEC Sues FTX Partner Bank for Alleged Fraud; Imposes Fines
The US Securities and Exchange Commission (SEC) has filed a lawsuit against Silvergate Capital Corporation, the parent company behind the crypto-friendly bank accused of facilitating fraud at the now-defunct FTX exchange.
According to Cointelegraph, the SEC's complaint, filed on July 1st in the Southern District of New York, alleges that Silvergate, former CEO Alan Lane, and former Chief Risk Officer Kathleen Fraher misled investors regarding the Bank Secrecy Act/Anti-Money Laundering regulations.
The SEC also charged former Chief Financial Officer Antonio Martino with misleading investors about the company's losses from securities sales following the collapse of FTX. All parties except Martino have agreed to settle the SEC's lawsuit.
Martino has stated, "The allegations made by the SEC are baseless and irresponsible, and I look forward to presenting my case in court to clear my name," according to a statement from his attorney at Linklaters.
SEC Enforcement Director Gurbir Grewal claimed that Silvergate failed to detect nearly $9 billion in suspicious transfers between FTX and its affiliated entities, leading to significant losses for investors. He also accused the bank and its executives of misleading investors following the collapse of FTX from November 2022 to January 2023. The SEC stated that Silvergate has agreed to pay a civil penalty of $50 million (IDR 818.9 billion), though it does not admit or deny the allegations.
Lane and Fraher have agreed to pay fines of $1 million (IDR 16.3 billion) and $250,000 (IDR 4 billion), respectively.
The settlement will be contingent upon court approval, even though fines have been paid.
A Brief Overview of FTX's Collapse
In March 2023, Silvergate voluntarily liquidated after several crypto companies announced their intent to sever ties with the bank over issues related to FTX.
FTX, which had collapsed and filed for bankruptcy in November 2022, has led to criminal charges against several executives, including former CEO Sam Bankman-Fried, who is currently serving a 25-year federal prison sentence.
The complaints state that under Sam Bankman-Fried's leadership, FTX directed customers to transfer funds to Alameda accounts at Silvergate in exchange for assets on the crypto exchange.
The former CEO also provided testimony for the crypto-friendly bank’s website, claiming that it had "revolutionized banking for blockchain companies."
The SEC’s actions follow a class action lawsuit filed by FTX users against Silvergate, alleging that the bank was aware of fraudulent activities at the crypto exchange.
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