Caroline Ellison, the former CEO of Alameda Research, has agreed to give up most of her assets to help pay back FTX creditors as part of a settlement with the bankrupt crypto exchange’s estate. This deal is meant to recover funds for those affected by FTX’s collapse, with Ellison handing over almost everything except what the government has already seized or what’s set aside for her legal expenses.
She has also promised to cooperate with investigations into FTX’s downfall, which started when the company filed for bankruptcy in late 2022. The legal team is trying to recover millions of dollars in bonuses and payments Ellison received before the collapse. After the settlement, she’ll only be left with her personal belongings.
The FTX case is complex, but a reorganization plan was recently approved, which was backed by most creditors and will cover about $6.83 billion in claims.
FTX’s Collapse
FTX was once one of the world’s largest cryptocurrency exchanges but collapsed in November 2022. The trouble began when a report by CoinDesk revealed that much of the assets held by Alameda Research, a trading firm closely tied to FTX, consisted of FTT, a token created by FTX.
This sparked concerns about FTX’s liquidity and financial stability and led to a wave of withdrawals by customers, which the company couldn’t fulfill. As a result, FTX filed for bankruptcy just days later, wiping out billions of dollars in user funds.
It was discovered that FTX had lent billions of dollars worth of customer deposits to Alameda Research, which used these funds for risky investments and trading activities. This was a huge breach of trust and a significant factor in the collapse because customers believed that their funds were safely held on the exchange.
