- FTX has filed a motion seeking approval for a settlement agreement with former Alameda Research CEO Caroline Ellison, requiring her to turn over substantially all of her remaining assets to FTX creditors.
- Ellison agreed to transfer any assets not forfeited to the government in her criminal case or used for legal fees, and to cooperate with FTX’s investigations and court cases.
- The settlement avoids further litigation against Ellison, which FTX argues would deplete her remaining resources while providing little additional recovery.
Former Alameda Research CEO Caroline Ellison has agreed to a settlement with bankrupt crypto exchange FTX that will require her to hand over virtually all assets she has left. This comes after FTX sued Ellison earlier this year, alleging she played a key role in the fraud that led to FTX’s collapse.
Settlement Terms: Ellison to Transfer Assets, Assist Investigations
Under the terms of the settlement, Ellison will transfer any assets not already forfeited to the government or used for legal fees to FTX creditors. This includes bonuses, equity, and other compensation she received from her time at Alameda Research.
Once the transfers are complete, Ellison will have no significant assets left besides some personal property. The settlement did not specify the total value of assets she will turn over.
In addition, Ellison has agreed to cooperate with FTX’s ongoing investigations and lawsuits. This cooperation may involve providing documents and insider knowledge from her time leading FTX’s sister trading firm Alameda Research.
Rationale: Maximize Recovery, Avoid Litigation Costs
In their motion, FTX argued the settlement made sense rather than pursuing costly litigation against Ellison. They said it allows creditors to recover as much as possible, while Ellison’s cooperation provides extra value.
FTX noted that continuing legal action would just drain Ellison’s remaining resources without recovering substantially more. The settlement avoids those costs and locks in her cooperation.
What’s Next: Court Approval, Bankman-Fried Trial
The settlement requires approval from the bankruptcy court overseeing FTX’s Chapter 11 case. A hearing is scheduled for November 17.
Ellison has already cooperated extensively with prosecutors in the criminal case against FTX founder Sam Bankman-Fried. She received a reduced 2-year sentence in September for her role in the fraud.
Bankman-Fried’s criminal trial is slated to begin in October 2023. Ellison may provide additional testimony and evidence as part of her cooperation deal.
