Former Alameda Research Director Caroline Ellison Makes Deal with FTX to Compensate Creditors
Caroline Ellison, former director of Alameda Research, has reached an agreement with FTX, relinquishing the majority of her assets to contribute to compensating FTX creditors after the company’s collapse.
A Settlement to Recover Funds for Creditors
Following the settlement, Ellison will have no assets other than some personal physical belongings.
In a filing on Monday, FTX Trading Ltd. stated that Ellison had agreed to transfer “the bulk of her assets,” excluding those already seized by the government or intended to cover her legal expenses, to FTX debtors. This agreement also includes a commitment from Ellison to fully cooperate with FTX’s bankruptcy estate in ongoing and future investigations.
The bankruptcy of FTX, declared in 2022, has resulted in lawsuits against Sam Bankman-Fried, founder of FTX, Ellison, and several other former executives. FTX debtors are seeking to recover as many assets as possible to compensate creditors for their losses. The lawsuits aim to recover approximately $22.5 million in bonuses transferred to Ellison in February 2022, as well as $6.3 million paid in July and September 2021.
Approval of FTX’s Reorganization Plan
Judge John Dorsey of the Delaware bankruptcy court approved FTX’s reorganization plan at a hearing on Monday. This plan received support from 94% of the “dotcom customer entitlement claims” class creditors, which represent approximately $6.83 billion in claims. This plan is expected to allow creditors to recover a portion of the funds lost during FTX’s spectacular collapse.
A Key Role in FTX Investigations
Caroline Ellison’s role in the FTX collapse, though incriminating, has taken a different turn compared to other executives, largely thanks to her cooperation with authorities. Already sentenced to two years in prison for her involvement in the case, she has agreed to facilitate ongoing investigations. In a statement from September, John J. Ray III, current CEO of FTX’s bankruptcy estate, commended her assistance, noting that it had “recovered hundreds of millions of dollars in assets for the benefit of creditors.”
The Repercussions of FTX’s Collapse
Sam Bankman-Fried, founder of FTX and former partner of Ellison, was sentenced to nearly 25 years in prison earlier this year. His sentence includes an obligation to repay up to $11 billion in losses suffered by the platform’s investors and lenders.
This episode marks a new stage in FTX’s attempt to recover some of the massive losses caused by mismanagement and fraudulent activities that led to the cryptocurrency giant’s downfall. Ellison’s cooperation is seen as a central element in the efforts to restore justice for the victims of FTX’s collapse.
