Judge Bans FTX and Alameda from Crypto Trading

This decision marks the conclusion of a protracted 20-month lawsuit initiated by the Commodity Futures Trading Commission (CFTC).

A federal judge in Manhattan has approved a Commodity Futures Trading Commission (CFTC) order requiring FTX and Alameda to pay $12.7 billion to creditors.

The order, which was finalized on Wednesday, stems from a 20-month lawsuit filed by the CFTC against the bankrupt crypto exchange and its hedge fund affiliate. The order also bans FTX and Alameda from engaging in digital asset trading and acting as principals for other digital asset commodity interests in the U.S.

The CFTC had accused FTX and Alameda of fraud and misrepresentation, alleging that the exchange commingled customer funds with Alameda's assets and lied about FTX's financial health.

FTX filed for bankruptcy in November 2022 after a liquidity crisis and allegations of fraud wiped out billions of dollars in customer funds. The bankruptcy has left a sour taste in the mouths of many investors and creditors who have suffered substantial financial losses.

The order marks a significant development in the ongoing fallout from the FTX collapse. The $12.7 billion payment is intended to compensate the creditors who were affected by the exchange's failure, and the precise distribution of these funds will be closely monitored by both industry observers and the affected parties.

As FTX and Alameda are barred from future digital asset trading and intermediary roles, the crypto industry will continue to assess the implications of this case. The ruling serves as a stark reminder of the inherent risks associated with investing in and trading cryptocurrencies in the absence of adequate regulatory safeguards.

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