- On October 7, the FTX administration submitted a motion to settle with Caroline Ellison.
- As part of the proposed agreement, Ellison consented to surrender all her assets.
- She had earlier agreed to forfeit her assets to the U.S. government and repay legal fees to FTX creditors.
Over the past year, justice has steadily caught up with those involved in the infamous 2022 collapse of the FTX exchange.
Key figures, including founder Sam Bankman-Fried (SBF) and his close associates, have faced severe legal repercussions. These legal repercussions range from prison sentences to asset seizures.
The latest individual to face legal consequences is Caroline Ellison, SBF’s ex-girlfriend and a significant player in the FTX scandal. On October 7, the new FTX administration filed a motion to settle with Ellison. The FTX settlement requires her to surrender all her assets.
Previously, Ellison, who led Alameda Research, had agreed to forfeit assets to the U.S. government. However, the motivation behind SBF’s actions remains unclear. Ellison has also committed to returning any legal fees she received to FTX creditors.
According to the current motion, her remaining assets will only be accessible after meeting the settlement terms.
The court documents do not disclose the exact value of Ellison’s forfeited assets. The motion specifies that she will retain only a few personal items after the settlement. This agreement aims to streamline the ongoing FTX bankruptcy proceedings.
Additionally, Ellison has agreed to assist the estate in winding down the firm, helping to generate more value for creditors.
Authority Strives for FTX Settlement Agreement out of Caroline Ellison
Caroline Ellison has been actively assisting with investigations and court cases related to FTX and has committed to continuing her cooperation.
She will share valuable documents and insights from her time at Alameda Research. As a former partner of FTX founder Sam Bankman-Fried, her cooperation is crucial.
The FTX administrator believes that settling with Ellison will aid the overall recovery process. They argue that the FTX settlement offers “substantially all” of what could be obtained through litigation. This will help in avoiding the costs and delays of a legal battle.
Ellison has also pledged to fully cooperate with the FTX bankruptcy estate in ongoing and future investigations.
FTX’s collapse began in late 2022 when the company filed for bankruptcy. This sparked a legal battle to recover assets from former executives, including Ellison and Bankman-Fried.
In July, the FTX bankruptcy estate sued Ellison. The organization accused her of wasting corporate assets, breaching fiduciary duties, and making fraudulent transfers. They seek to recover $22.5 Million in bonuses and $6.3 Million from previous years.
The settlement terms indicate that Ellison will retain only her physical personal property after transferring her assets. The FTX bankruptcy case has garnered significant attention due to its complexity and the high stakes.
Judge Dorsey Approves FTX Bankruptcy Plan
The proposed FTX settlement with Caroline Ellison is scheduled for a court hearing on November 20. There, the judge will decide whether to approve the agreement.
Ellison received a reduced sentence due to her full cooperation with federal prosecutors. She was sentenced to two years on September 24 for her role in the collapse of the FTX money laundering platform.
This cooperation has positioned her favorably within the legal system. Also, the outcome of her settlement could impact the bankruptcy proceedings.
Last week, bankruptcy judge John Dorsey approved FTX’s bankruptcy plan. This plan allows former customers and crypto holders to recover significant portions of their claims.
Analysts predict that creditors could recover between 118% and 142% of their claims by the end of the year.
Under this plan, FTX is expected to distribute $12 Billion in credits to creditors. It could inject much-needed liquidity into the crypto market. This payout might encourage traders to return to digital assets, potentially revitalizing the market.
The SEC might Challenge FTX’s Repayment plan to Repay Creditors using Stablecoins
Last month, the SEC cautioned that it might oppose FTX’s repayment strategy if it includes reimbursing creditors with stablecoins. Although using stablecoins for repayments isn’t necessarily illegal, SEC attorneys emphasized that the agency could challenge such repayments.
Especially if they involve US-dollar pegged crypto assets. FTX has explored various methods to compensate creditors. This includes an abandoned plan to relaunch the exchange.
The latest proposal suggests liquidating assets and settling claims based on their U.S. dollar value at the time of FTX’s bankruptcy. Under this plan, creditors would receive their repayments in either cash or stablecoins.
Disclaimer
In this article, the views, and opinions stated by the author, or any people named are for informational purposes only, and they don’t establish the investment, financial, or any other advice. Trading or investing in cryptocurrency assets comes with a risk of financial loss.
