Following Sam Bankman-Fried’s sentencing, former FTX executives and promoters agreed to a $1.3 million class action lawsuit settlement, according to court documents filed yesterday.
Former head of engineering for FTX, Nishad Singh, Alameda Research CEO Caroline Ellison, chief technological officer for FTX, Gary Wang, and seven promoters of the bankrupt exchange have all agreed to forfeit a total sum of $1.3 million following claims that they participated in and perpetuated ringleader Sam Bankman-Fried’s multi-billion dollar fraud on FTX customers.
FTX Executives Pay Up in Lawsuit Settlement
In addition to having “pled guilty in the criminal proceedings against them,” FTX insiders “have agreed to full restitution and forfeiture” of the designated sum.
The agreement will allow Judge Lewis A. Kaplan, who presided over the U.S. government’s case over Sam Bankman-Fried case, to decide “how the FTX victim funds recovered from them will be provided to the FTX victims.”
🚨 Investors in FTX’s collapse settle for $1.3M with inner circle and promoters, resolving fraud scheme claims.#FTX #fraud #settlement @FTX_Official @SBF_FTX
— 11thestate (@11thestate) March 29, 2024
“The FTX collapse—the rapid unraveling of one of the world’s biggest scams—is certainly one of recent history’s greatest financial disasters,” the settlement reads. “For over a year, Plaintiffs and MDL Counsel have worked tirelessly to efficiently litigate these claims to benefit all FTX Victims. Today, those efforts begin to bear fruit.”
Sam Bankman-Fried Sentenced To 25 Years, $11 Billion Fine
The FTX lawsuit agreement follows Bankman-Fried’s March 28 sentencing hearing in Manhattan federal court that saw the now disgraced FTX founder sentenced to 25 years in prison.
Judge Kaplan compared Bankman-Fried’s massive digital asset fraud to a game where he weighed the chances of getting caught “against the gain of getting away without getting caught, given the probabilities.”
It looks like my prediction was accurate — Judge Kaplan imposed a 25-year sentence for Sam Bankman-Fried, well below the Sentencing Guidelines range.
That sentence will hold up on appeal. It’s a lengthy sentence, and SBF will serve over 20 years. https://t.co/FbVAYrz4cz
— Renato Mariotti (@renato_mariotti) March 28, 2024
In addition to his lengthy sentence, Bankman-Fried has been ordered to pay over $11 billion in forfeiture.
“I know a lot of people feel really let down, and they were right, they were, were very let down,” Bankman-Fried told the court. “I’m sorry about that. I’m sorry about what happened at every stage, things I should have done and said, and things I shouldn’t have. I failed everyone I care about and everything I care about too.”
However, he doubled down on the belief that the crypto exchange “always” had enough assets to cover its losses and that he was “hopeful” and “optimistic” that the exchange would pay back customers, lenders, and investors in the near future.
FTX Bankruptcy Estate In Hot Water
Meanwhile, the FTX bankruptcy estate continues to trudge through numerous legal challenges, most recently acquiring Unabomber prosecutor Robert J. Cleary to investigate law firm Sullivan and Cromwell’s potential conflicts of interest with the crypto exchange.
The law firm is also facing a February 2023 class action lawsuit from several FTX investors who claim Sullivan and Cromwell “got rich” off Bankman-Fried’s businesses.
“S&C stood to gain financially from the FTX Group’s misconduct and so agreed, at least impliedly, to assist that unlawful conduct for its own gain,” the lawsuit reads.
Bankman-Fried has been ordered to live out his sentence in a medium-security prison given in part to his connection to “vast wealth.” He has two weeks from the date of the court’s judgment submission to appeal the case.