Bankrupt crypto exchange FTX announced that Caroline Ellison, former CEO of Alameda Research, has agreed to transfer nearly all of her remaining assets to the company as part of a settlement.
In an Oct. 7 court filing, FTX’s bankruptcy estate disclosed that Ellison will hand over most of what she still owns, following her forfeitures to the US government and coverage of her legal expenses.
In addition, Ellison also agreed to cooperate with the estate’s efforts to wind down the firm, assisting in generating more value for creditors.
This settlement follows Judge John Dorsey’s recent approval of FTX’s bankruptcy plan. Under this plan, the failed firm’s former customers could recover between 118% and 142% of their claim values, with speculations that customers with claims under $50,000 could start receiving their payments before the end of this year.
Ellison left bare
While the court filing did not specify the exact value of the assets Ellison will forfeit, FTX stated that she would be left with nothing “other than certain physical personal property.”
FTX argued that this move is beneficial because they have technically secured “substantially all that could be recovered” through the settlement. Further, her cooperation with the bankruptcy proceedings is expected to aid the estate’s value recovery efforts.
So, pursuing litigation would only result in higher costs and delays. The firm stated:
“The proposed settlement would therefore generate more value to Plaintiffs’ estates than if Plaintiffs were to continue litigating the Adversary Proceeding against Ellison.”
However, the agreement still requires court approval, with a hearing scheduled for Nov. 20.
FTX filed a lawsuit against Ellison in July 2023, accusing her of breaching fiduciary duties, misusing company funds, and making fraudulent transfers. The lawsuit sought the recovery of approximately $22.5 million from 2022 bonus payments and an additional $6.3 million from bonuses received in 2021.
Last month, Ellison was sentenced to two years in prison for her involvement in misappropriating customer funds and was a central witness in the case against the convicted founder of the defunct exchange, Sam Bankman-Fried.
