- FTX requests court approval for Caroline Ellison to surrender the majority of her assets.
- Ellison has consented to assist with investigations into FTX and its founder, Sam Bankman-Fried.
- A hearing concerning the proposed settlement is set for November 20, 2024.
In a pivotal turn of events regarding the FTX bankruptcy case, FTX is petitioning the court for authorization of a settlement that would require Caroline Ellison, the ex-CEO of Alameda Research, to relinquish nearly all of her assets to FTX’s creditors. This move is aimed at facilitating a quicker recovery for the individuals impacted by the downfall of the cryptocurrency platform.
The settlement was submitted to the court on October 7 and is designed to expedite financial restitution for affected parties.
Ellison’s Cooperation in Focus
The court motion indicates that Ellison, who received a 24-month prison sentence for her role in the FTX fraud in September, will forfeit any assets not already surrendered to the government in her criminal proceedings or designated for legal expenses. Ultimately, following this transfer, she is expected to retain only a minimal amount of personal belongings, although the exact value of the assets involved remains undisclosed.
Moreover, Ellison has expressed her commitment to cooperate with ongoing investigations related to FTX, as well as the legal case against its founder, Sam Bankman-Fried. This cooperation is anticipated to involve the provision of critical documents and insights from her tenure at Alameda Research, which is particularly crucial given her direct association with Bankman-Fried.
FTX’s Strategy: Settling vs. Litigation
FTX advocates that this proposed settlement represents a more effective approach than initiating a separate lawsuit against Ellison. They believe this strategy will result in the recovery of almost all of Ellison’s possessions while her cooperation potentially adds significant weight to the recovery process.
Legal analysts warn that pursuing litigation could deplete Ellison’s remaining resources, resulting in heightened costs for both parties involved.
In July 2023, FTX’s bankruptcy estate initiated legal action against Ellison, alleging breaches of fiduciary duty and fraudulent transfers. The estate sought to reclaim $22.5 million in bonuses issued in February 2022 and an additional $6.3 million from 2021. The lawsuit further addressed claims regarding call options and equity in FTX transferred to Ellison.
A hearing regarding the proposed settlement is slated for November 20. Ellison, who has previously assisted federal prosecutors in the criminal case against Bankman-Fried, received a mitigated sentence of two years on September 24 due to her involvement in the scandal.
Simultaneously, FTX’s bankruptcy plan received court approval on October 7, enabling former clients and cryptocurrency holders to potentially recover between 118% and 142% of their claims as of November 2022.