The collapse of the cryptocurrency exchange FTX in November 2022 accounted for $12.7 billion in restitution and disgorgement, setting a record as the largest recovery in the CFTC’s history.
By Bena Ilyas
Edited by Julia Sakovich
Updated
3 mins read
The United States Commodity Futures Trading Commission (CFTC) released its historic haul for fiscal year 2024, boasting an eye-popping $17.1 billion in monetary relief. Most of this staggering figure emerged from an intense focus on cryptocurrency enforcement, marking a seismic shift in regulatory oversight.
Of the total, $2.6 billion came from civil monetary penalties, while $14.5 billion was attributed to disgorgement and restitution efforts. The announcement made on December 5 highlighted a banner year for the CFTC as it worked to hold major players in the financial world accountable for their actions.
The most significant contributor to this financial windfall was the collapse of the crypto exchange FTX in November 2022. The fallout from FTX accounted for $12.7 billion in restitution and disgorgement, setting a record as the largest recovery in the CFTC’s history.
FTX’s unraveling was nothing short of catastrophic, and the CFTC didn’t hold back. Fraud claims were leveled against the exchange, its sister firm Alameda Research, and key executives, including founder Sam Bankman-Fried. The settlement included $8.7 billion in restitution and $4 billion in disgorgement, cementing its place as the most significant enforcement action ever undertaken by the agency.
In March, Bankman-Fried received a 25-year prison sentence, underscoring the serious consequences of his actions. However, the legal battles are far from over. Cases remain active against FTX co-founder Gary Wang, former Alameda co-CEO Caroline Ellison, and former FTX co-owner Nishad Singh, highlighting the complexity and scale of the debacle.
The FTX case sent shockwaves through the cryptocurrency industry, illustrating the risks of lax oversight and the devastating impact of fraudulent behavior. It also served as a warning to other market participants: the CFTC is watching, and it means business.
FTX wasn’t the only crypto giant to face the CFTC’s wrath. In a high-profile settlement, Binance and its founder Changpeng Zhao were hit with $1.35 billion in civil monetary penalties. Zhao personally paid $150 million as part of the deal, and the exchange was ordered to disgorge an additional $1.35 billion.
Other cases also underscored the breadth of the agency’s enforcement. The CFTC charged Stephen Ehrlich, former CEO of Voyager, with commodity pool fraud and registration failures. Although litigation is ongoing, the federal district court sided with the CFTC on key legal issues, denying Ehrlich’s motion to dismiss.
The CFTC also took aim at Ponzi-like schemes disguised as legitimate ventures. Seneca Ventures, a fraudulent operation involving crypto and derivatives, was ordered to pay $110.9 million in civil penalties, $83.7 million in restitution, and $36.9 million in disgorgement.
The agency’s enforcement actions stretched beyond numbers and legal victories. CFTC Chair Rostin Behnam emphasized the broader mission, stating:
“The CFTC remains steadfast in its duties to protect customers and vigorously oversee CFTC-regulated markets critical to the health of the US economy.”
As the dust settles on this landmark year, questions remain about what comes next. Will the industry adapt and prioritize compliance, or will the allure of cutting corners continue to tempt bad actors? For now, the CFTC’s actions stand as a warning — and a testament to the power of accountability.
Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article aims to deliver accurate and timely information but should not be taken as financial or investment advice. Since market conditions can change rapidly, we encourage you to verify information on your own and consult with a professional before making any decisions based on this content.
With over 3 years of crypto writing experience, Bena strives to make crypto, blockchain, Web3, and fintech accessible to all. Beyond cryptocurrencies, Bena also enjoys reading books in her spare time.
