The FTX bankruptcy proceedings are nearing a conclusion following the exchange’s latest settlement demand from the former Alameda Research CEO Caroline Ellison.
In its recent filing, FTX proposes that Ellison relinquishes almost all her assets in the FTX estate. This deal marks part of the exchange’s moves to recover more funds for distribution to its creditors.
Moreover, the exchange has received approval for its reorganization plan from the US Bankruptcy Court.
FTX Proposes a Settlement Deal for Alameda Research Former CEO Caroline Ellison
FTX filed a motion proposing a settlement deal with Caroline Ellison, the former CEO of its sister trading platform, Alameda Research. According to the filing, the exchange demanded that Ellison forfeit almost all her assets in the FTX estate.
Ellison agreed with the government to transfer some assets not forfeited in her criminal case or used to settle legal fees. So, FTX seeks the court to authorize the transfer of the remaining assets to FTX creditors.
Per the document, Ellison agreed to give nearly all her assets and cash to FTX. Her move serves as a means to disentangle herself from Sam Bankman-Fried, FTX’s founder, and her ex-boyfriend.
In addition, Ellison agreed to assist the exchange with its ongoing investigations and legal proceedings. Her contributions could be in the form of sharing documents and vital information during her official working period as Alameda CEO and her relationship with Sam bankman-Fried.
Moreover, FTX recognized that settling with Ellison was more beneficial than furthering litigation against her. This resolution approach is quicker compared to a possible prolonged legal battle.
Also, the settlement deal provides a more substantial recovery for the exchange and its creditors in terms of resources. Therefore, FTX ruled out the place of lengthy legal proceedings that will not only take more time but also deplete Ellison’s remaining assets.
Meanwhile, the documents noted that the settlement deal will leave the former Alameda boss with just a few personal properties.
The filing stated: “Following the settlement, Ellison will have no remaining assets other than certain physical personal property. Significantly, Ellison has also committed to cooperating with the Debtors in ongoing investigations and litigation – a benefit that the Debtors would not be able to obtain even if they prevailed at trial against Ellison.”
However, the motion fails to indicate the monetary value of the assets Ellison will relinquish in the settlement deal.
Ellison Cooperation with FTX Bankruptcy Proceedings
A court hearing for the proposed settlement deal between FTX and Caroline Ellison is set for November 20.
In July 2023, the FTX Bankruptcy estate sued Ellison, the former boss of Alameda Research. The suit claimed that Ellison violated some fiduciary duties and executed fraudulent transactions with corporate funds.
Ellison cooperated with the federal prosecutors during her court proceedings, especially in the criminal case against Bankman-Fried. She pleaded guilty to money laundering and wire fraud charges and testified against SBF.
Subsequently, on September 24, the court gave her a lower sentence of two years in prison. Conversely, Bankman-Fried was sentenced to 25 years in prison for his activities and fraud of $8 billion from customers.
