Caroline Ellison To Forfeit Assets in FTX Lawsuit Settlement

Former Alameda Research CEO Caroline Ellison has agreed to forfeit some of her assets in the FTX bankruptcy dealings

In the latest chapter of the FTX bankruptcy saga, Caroline Ellison, the former CEO of Alameda Research, settled with regulators. 

This agreement is significant in the ongoing efforts to recover funds for creditors affected by the collapse of the FTX Derivatives Exchange.

The Caroline Ellison Compromise

FTX, once a dominant force in the crypto industry, filed for bankruptcy in late 2022. This came after a shocking financial collapse that lost billions of dollars in customer funds. Following the bankruptcy, the FTX estate sued Ellison, and she received a two-year sentence last week. 

A Monday court filing revealed that Ellison has agreed to turn over all of her assets to the FTX debtors. However, this excludes those forfeited to the government or earmarked for legal fees. 

The lawsuit primarily targets Ellison’s approximately $22.5 million in bonuses received in February 2022. It also includes the $6.3 million transferred to her in mid-to late 2021. Interestingly, Ellison has extensively cooperated with the FTX bankruptcy estate in the ongoing investigations. 

Her cooperation has already proven fruitful. The CEO of the FTX estate, John J. Ray III, noted that Ellison’s assistance helped recover hundreds of millions in debtor assets.

Judge Approves FTX Reorganization Plan

As the investigations and settlements continued, a major development occurred in the reorganization process. On Monday, Judge John Dorsey of the U.S. Bankruptcy Court for the District of Delaware approved FTX’s reorganization plan. 

This approval came with the support of about 94% of creditors in the “dotcom customer entitlement claims” class, representing nearly $6.83 billion in claims. The approval is a critical step toward FTX’s recovery efforts, providing a roadmap for distributing assets back to the creditors affected by the collapse.

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