The cryptocurrency exchange founded by convicted fraudster Sam Bankman-Fried will need to pay billions to former FTX customers and other victims, the Commodity Futures Trading Commission announced Thursday.

FTX Trading and its companion cryptocurrency trading firm Alameda Research will need to pay $12.7 billion under the terms of a consent order entered by the U.S. District Court for the Southern District of New York.

What You Need To Know

  • FTX Trading and its companion cryptocurrency trading firm Alameda Research will need to pay $12.7 billion under the terms of a consent order entered by the U.S. District Court for the Southern District of New York

  • It is the Commodity Futures Trading Commission's largest-ever restitution order

  • The order found FTX violated CFTC regulations, including misrepresentations and omissions to customers about its business

  • FTX promised to keep customer and FTX assets separate when they were instead commingled and misappropriated

“FTX used age-old tactics to create an illusion that it was a safe and secure place to access crypto markets,” CFTC Chairman Rostin Behnam said in a statement about the agency’s largest-ever restitution order. “But the basic regulatory tools, like governance, customer protections and surveillance that exist to identify misconduct and ultimately prevent collapse were simply not there.”

The order found FTX violated CFTC regulations, including misrepresentations and omissions to customers about its business. The court said FTX had billed itself as “the safest and easiest way to buy and sell crypto” and promised it had kept customer and FTX assets separate when they were instead “commingled and misappropriated.”

Bankman-Fried was convicted of fraud and other crimes in November 2023. In March, the U.S. Department of Justice sentenced him to 25 years in prison and ordered him to pay $11 billion in forfeiture for orchestrating several fraudulent schemes.

Bankman-Fried founded FTX in 2019 as an international cryptocurrency exchange that handled billions of dollars in trades. The Department of Justice said he misappropriated the money for his personal use and to contribute millions of dollars to political candidates between April 2019 and December 2022, when he was arrested in the Bahamas and extradited to the U.S. to face fraud charges.

The CFTC chairman said the FTX restitution order is “just the tip of the iceberg. In the absence of digital asset legislation to fill regulatory gaps, entities will continue to operate in the shadows without these basic tools of sound regulation, sharpening their deceptive practices and continuing to dupe customers.”

U.S. lawmakers have introduced legislation to incorporate digital assets, such as cryptocurrency, into the country’s existing financial regulations, but it has not passed. The U.S. is the world’s largest cryptocurrency market, with an annual revenue of about $10 billion.