FTX Founder Sam Bankman-Fried (Photo credit: Yuki Iwamura/Bloomberg)

A United States court has ordered bankrupt cryptocurrency exchange FTX and its affiliated trading firm Alameda Research to pay a combined $12.7 billion in restitution and disgorgement.

The order, approved by US District Judge Peter Castel on Aug. 7, comes as part of a settlement with the Commodity Futures Trading Commission (CFTC), which accused the companies of misappropriating customer funds and engaging in fraudulent activities.

The bulk of the penalty, $8.7 billion, is earmarked for restitution to be paid directly to customers who suffered losses due to FTX and Alameda’s misconduct. The remaining $4 billion represents the disgorgement of ill-gotten gains, which will be paid towards the CFTC’s claim in the ongoing FTX bankruptcy proceedings.

The order also imposes permanent injunctions on FTX and Alameda, prohibiting them from engaging in further violations of the Commodity Exchange Act and CFTC regulations. The companies are also required to cooperate fully with the CFTC in any ongoing or future investigations or litigation related to the case.

The CFTC’s complaint, initially filed in December 2022 — a month after FTX filed for bankruptcy — detailed how the exchange, under the leadership of Sam Bankman-Fried, allowed Alameda unrestricted access to customer deposits, essentially treating them as Alameda’s own assets. This practice continued despite FTX’s public assurances that customer funds were safe and segregated. The court found that FTX and Alameda’s actions constituted a clear violation of the Commodity Exchange Act and CFTC regulations.

Bankman-Fried was previously found guilty on seven counts of fraud, conspiracy, and money laundering. In March, he received a 115-year prison sentence and was ordered to forfeit $11 billion.