FTX seeks court approval for Caroline Ellison to forfeit nearly all her assets.
Ellison has agreed to cooperate with investigations into FTX and Sam Bankman-Fried.
A hearing for the proposed settlement is scheduled for November 20, 2024.
In a significant development for the FTX bankruptcy proceedings, FTX is seeking court approval for a settlement that will mandate Caroline Ellison, the former CEO of Alameda Research, to hand over almost all of her assets to the creditors of FTX.
The settlement, filed in court on October 7, aims to expedite recovery for those affected by the collapse of the cryptocurrency exchange.
Betting on Caroline Ellison cooperation
According to the motion, Ellison, who was sentenced to 24 months in prison over FTX fraud in September, will forfeit any assets not already surrendered to the government in her criminal case or earmarked for legal fees. Following the completion of this transfer, she will reportedly possess only a small amount of physical personal property, although the total value of the assets involved has not been disclosed.
In addition to the asset transfer, Ellison has committed to cooperating with ongoing investigations related to FTX and legal proceedings against its founder, Sam Bankman-Fried. Her cooperation is expected to include sharing vital documents and information obtained during her time at Alameda Research, which is pivotal given her close association with Bankman-Fried.
FTX avoiding to file a separate lawsuit against Ellison
FTX maintains that this settlement is a more beneficial route than pursuing a separate lawsuit against Ellison. The company argues that the settlement will enable them to recover almost all of Ellison’s assets, and her collaboration adds significant value to the recovery process.
Legal experts suggest that litigation could drain Ellison’s remaining resources, incurring additional costs for both parties.
Previously, FTX’s bankruptcy estate filed a lawsuit against Ellison in July 2023, accusing her of breaches of fiduciary duty and fraudulent transfers. The estate sought to reclaim $22.5 million in bonuses awarded in February 2022 and $6.3 million from 2021. Additionally, the lawsuit highlighted allegations regarding call options and FTX equity transferred to Ellison.
A hearing on the proposed settlement is scheduled for November 20. Ellison, who has already cooperated with federal prosecutors in the criminal case against Bankman-Fried, received a reduced sentence of two years on September 24 for her involvement in the scandal.
Meanwhile, FTX’s bankruptcy plan was approved on October 7, allowing former customers and crypto holders to recover between 118% and 142% of their claims as of November 2022.
The post Caroline Ellison to forfeit assets in FTX’s settlement proposal appeared first on CoinJournal.