FTX, Alameda ordered to pay $12.7B to creditors

It's just a little shy of two years since FTX suddenly collapsed the morning after U.S. midterm elections, and a judge has approved a deal to distribute what remains of its assets to creditors.

Why it matters: In 2022, as the air was coming out of the tires of the cryptocurrency hot rod, FTX somehow became the world's darling for several months, before the whole thing turned out to be a giant fraud.

The latest: U.S. District Judge Peter Castel yesterday approved a deal for $8.7 billion in restitution to those who sustained losses from FTX and its sister company, Alameda Research, and $4 billion in disgorgement of profits.

• The deal ends a lawsuit against FTX filed by the Commodity Futures Trading Commission.
• The anticipated settlement was part of FTX's proposed reorganization plan, which remains subject to approval in its bankruptcy case.

Zoom out: Most people are getting paid back more than the dollar value of their assets on the day of the bankruptcy, thanks to the resurgence in value of cryptocurrency assets.

• However, lots of those creditors have already sold their claims to companies that specialize in distressed assets.

The big picture: FTX's implosion shattered the willingness of Congress to contemplate legislation to update regulations with consideration for cryptocurrency, but some of that appears to have returned.

What they're saying: "As I have been saying for years, this 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," CFTC chair Rostin Behnam said in a statement.