Caroline Ellison, the former CEO of Alameda Research, has agreed to surrender the bulk of her assets to FTX debtors as part of a settlement linked to the collapse of the FTX cryptocurrency exchange. The court filing, submitted on Monday, outlines the asset recovery process aimed at benefiting the creditors impacted by the downfall of FTX.
According to the filing by FTX Trading Ltd., Ellison will transfer “substantially all of her assets” to the FTX debtors. These include assets not already seized by the government or earmarked for her legal defense.
Cooperation in FTX Investigations
As part of the settlement, Ellison has also pledged to fully cooperate with the FTX bankruptcy estate in ongoing and future investigations concerning the collapse of the exchange. FTX’s bankruptcy, which began in late 2022, led to legal battles targeting the recovery of assets from former executives such as Ellison and Sam Bankman-Fried, the founder of FTX.
The litigation aims to recover around $22.5 million in bonuses Ellison received in February 2022, in addition to $6.3 million transferred to her in July and September 2021. After the asset transfer, Ellison will be left with only physical personal property.
FTX Bankruptcy Reorganization Plan Approved
The FTX bankruptcy case has garnered widespread attention due to its scale and complexity. On Monday, Judge John Dorsey of the U.S. Bankruptcy Court for the District of Delaware approved FTX’s reorganization plan. The plan has received backing from about 94% of creditors in the “dotcom customer entitlement claims” class, which represents roughly $6.83 billion in claims.
Ellison’s involvement in the FTX collapse led to a two-year prison sentence last month. Her role in the company’s failure caused significant financial losses for users, while Sam Bankman-Fried received a nearly 25-year prison sentence earlier this year and was ordered to repay up to $11 billion to investors and lenders.
Despite her sentencing, Ellison has been recognized for her cooperation with the bankruptcy estate. In a September filing, John J. Ray III, CEO of the FTX bankruptcy estate, highlighted her contributions, stating that Ellison’s cooperation had “resulted in the recovery of hundreds of millions of dollars in debtor assets for the benefit of creditors.”
SEC May Challenge FTX’s Stablecoin Repayment Plan
In a related development, the SEC has indicated it may challenge FTX’s repayment plan if it involves reimbursing creditors using stablecoins. While not outright illegal, the SEC has expressed concerns about using US-dollar pegged crypto assets for these repayments. FTX has proposed various strategies to compensate creditors, including a plan to liquidate assets and settle claims based on their U.S. dollar value at the time of bankruptcy. Under this plan, creditors would be repaid in either cash or stablecoins.
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