On October 7, the new FTX administration filed a motion to settle with Caroline Ellison. The talked-about agreement states that Ellison will turn over every resource she possesses.
While Ellison, the former head of Alameda Research, had previously agreed to turn over forfeited assets to the U.S. government, it’s still unclear what motivated the turn by SBF. She also pledged to return any legal fees she received to FTX creditors.
The current motion says Ellison’s remaining assets will be useable only after he meets the settlement terms. However, the court documents do not state the total value of Ellison’s forfeited assets.
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The motion confirms that she will keep only a few pieces of her physical personal property after the settlement. This agreement aims to simplify ongoing FTX bankruptcy cases.
FTX Administration Pursues Settlement with Caroline Ellison
Caroline Ellison was already assisting with investigations and court cases and said she would continue to do so with FTX. They will also help share documents and insights they found helpful from her time at Alameda Research.
Her cooperation is critical as a former partner of FTX founder Sam Bankman-Fried. The administrator of FTX, though, believes that settling with Ellison would help the overall recovery process.
They say the settlement provides ‘substantially all’ no matter what they would receive through litigation. The administration contends that the fight will use Ellison’s money to eliminate the legal process.
In July, the FTX bankruptcy estate sued Ellison. According to this lawsuit, she signed off on the waste of corporate assets, breached fiduciary duties, and made fraudulent transfers. FTX seeks to recover $22.5 million in bonuses and $6.3 million in previous years through this litigation.
FTX Bankruptcy Plan Approved by Judge Dorsey
The proposed settlement with Ellison is set to be heard on November 20. The court will decide whether to approve and accept these agreement terms, as this hearing will determine.
In a reduced sentence, Ellison fully cooperated with federal prosecutors. On September 24, the court sentenced Ellison to two years for helping collapse the FTX money laundering platform.
This has placed her favorably in the legal system. The outcome of her settlement agreement can affect a bankrupt’s proceedings.
But bankruptcy judge John Dorsey approved FTX’s bankruptcy plan last week. Thus, this approval enables former customers and crypto holders to retrieve large amounts of their claims.
Analysts said creditors are expected to recover between 118 and 142 percent of claims by the end of the year. Under its bankruptcy plan, FTX is expected to distribute credit to creditors for $12 billion.
If this payout comes through, it would help pump liquidity into the crypto market. These payouts may be a two-way street for traders, and some analysts even suggest they’ll enable a return to digital assets for quite a few traders.
