Bankrupted cryptocurrency exchange FTX has been ordered to pay $12.7 billion to its customers as a form of relief by a U.S. District Court for the Southern District of New York.
According to the announcement from the Commodity Futures Trading Commission (CFTC), the customers who had their funds locked on the exchange at the time of its failure in 2022 will receive 8.7 billion in restitution and $4 billion in disgorgement.
FTX filed for bankruptcy in November 2022 after it was unable to meet its obligations toward customers following the crypto market crash. It was later revealed that the exchange made a number of risky investments with the money deposited by its customers, while founder and CEO Sam Bankman-Fried used the funds for personal expenses. Bankman-Fried was later convicted of fraud and money laundering and was sentenced to 25 years in prison.
“FTX used age-old tactics to create an illusion that it was a safe and secure place to access crypto markets. But the basic regulatory tools, like governance, customer protections, and surveillance that exist to identify misconduct and ultimately prevent collapse, were simply not there,” said CFTC Chairman Rostin Behnam in a statement.
CFTC also added that it won’t collect any payments from FXT as a result of a lawsuit it brought up against the exchange until the customers are fully repaid.