Former Alameda Research CEO Caroline Ellison, who was sentenced last month to 2 years in prison for her role in the collapse of FTX, has reached a crucial settlement in the exchange's restructuring process.
In a recent filing, FTX revealed that Ellison, the former CEO of Alameda Research, will transfer the majority of his assets to the exchange's creditors as part of a liquidation agreement seeking to recover funds from those affected by the company's collapse in November 2022.
According to the filing, this agreement has been approved by a U.S. bankruptcy judge.
The deal marks a major step in the restructuring process of FTX, which filed for bankruptcy after a serious accounting deficit was discovered, preventing thousands of investors from accessing the funds they had deposited on the platform.
Now, through the recent agreement with Caroline Ellison, the company hopes to repay some of its creditors.
A settlement agreement of almost $30 million dollars
The presentation highlighted that Ellison's deal involves the transfer of “substantially all of its assets” that are not already subject to seizure by the government or its legal team, to cover their fees.
In this way, with the agreementFTX is seeking to recover approximately $30 million, of which approximately $22,5 million is from bonus payments that were transferred to Ellison in February 2022. Additionally, it is seeking to recover an additional $6,3 million that the former CEO of Alameda Research received between July and September 2021.
Following the recovery of these funds, Ellison will be left with only some physical personal property.
In addition to the recovery of some of the assets, the agreement also establishes a framework for Ellison to continue cooperating with ongoing investigations related to the collapse of FTX.
Ellison's key role in FTX investigations
This cooperation with federal agencies, which positively impacted last month's ruling, has been seen as a crucial element in facilitating the recovery of additional assets, for the benefit of creditors who have suffered significant losses.
As reported by this outlet, Caroline Ellison received a substantially lower sentence than expected for the charges of which she was found guilty. While the law called for a sentence of 110 years for the seven charges against her, Ellison was sentenced to 2 years in prison. The sentence handed down by Judge Lewis Kaplan to Caroline Ellison was lenient as her cooperation with agencies and prosecutors in the FTX case was considered.
Progress with the bankruptcy process
The FTX bankruptcy has been one of the most high-profile in cryptocurrency history, and the settlement with Ellison is a step toward recovering funds for creditors.
Recently, Judge John Dorsey approved FTX's reorganization plan, which was also supported by 94% of the platform's creditors, highlighting the urgency and need to resolve outstanding claims. This reorganization plan is based on the liquidation of assets and the repayment of creditors in cash or stablecoins. The claims against the failed exchange amount to approximately $6.830 billion, according to various sources.
The settlement with Ellison is part of a broader effort to recover funds from other FTX and Alameda Research executives, including founder Sam Bankman-Fried, who was sentenced to nearly 25 years in prison for his role in the firm's collapse.
However, despite these efforts, the future of FTX and its ability to repay all of its creditors remains uncertain, due to the complexity of the case and the magnitude of the claims.
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