Former Alameda CEO Agrees to Hand Over Majority of Assets to FTX Debtors in Bankruptcy Settlement
Caroline Ellison, the ex-CEO of Alameda Research, has recently reached a settlement with the FTX bankruptcy estate, agreeing to surrender most of her assets to benefit FTX debtors. This move comes as part of efforts to recover assets for creditors affected by the collapse of FTX, a prominent Cryptocurrency Exchange.
In a court filing disclosed on Monday, FTX Trading Ltd. outlined the terms of the agreement, stating that Ellison will transfer a significant portion of her assets to the FTX debtors. These assets include those that have not been confiscated by the government or designated for her Legal defense.
Ellison's Commitment to Cooperate in FTX Investigations
Moreover, alongside relinquishing her assets, Ellison has committed to fully cooperating with the FTX bankruptcy estate in both ongoing and future investigations concerning the case. The downfall of FTX began in late 2022, leading to a legal battle to recover assets from former executives, including Ellison and FTX founder Sam Bankman-Fried.
The ongoing litigation is focused on reclaiming Bonuses totaling approximately $22.5 million that Ellison received in February 2022, along with $6.3 million transferred to her in July and September 2021. As per the settlement terms, Ellison will retain only her physical personal property following the asset transfer.
Additionally, the FTX bankruptcy case has garnered widespread attention due to its complexity and scope. Judge John Dorsey of the U.S. Bankruptcy Court for the District of Delaware recently approved FTX's reorganization plan, which has attained support from about 94% of creditors within the "dotcom customer entitlement claims" class, representing approximately $6.83 billion in claims by value.
Notably, Ellison's involvement in the FTX collapse led to a two-year prison sentence last month, as she played a significant role in causing substantial losses to users. In contrast, Sam Bankman-Fried received a nearly 25-year prison term earlier this year and was ordered to repay up to $11 billion to investors and lenders.
SEC's Potential Challenge to FTX's Stablecoin-Denominated Repayments Plan
Last month, the U.S. Securities and Exchange Commission (SEC) issued a warning that it could challenge FTX's repayment plan if it involves returning funds to creditors using stablecoins. While repaying creditors with stablecoins may not be explicitly illegal, SEC attorneys noted that the agency reserves the right to contest such repayments if they involve US-dollar pegged Crypto Assets.
FTX has explored various Strategies to reimburse creditors, including a previously considered plan to revive the exchange. The latest proposal from FTX suggests liquidating assets and settling claims based on the U.S. dollar value of those assets at the time of the exchange's bankruptcy, with creditors potentially being repaid in Cash or stablecoins under this plan.
Despite her sentencing, Ellison has been recognized for her cooperation with the efforts of the bankruptcy estate. Prior to her sentencing, John J. Ray III, CEO of the FTX bankruptcy estate, highlighted Ellison’s contributions, noting that her cooperation has resulted in the recovery of hundreds of millions of dollars in debtor assets for the benefit of creditors.
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