FTX is seeking court approval for a settlement requiring former Alameda Research CEO Caroline Ellison to transfer nearly all her assets to the company’s creditors.
Caroline Ellison, the former CEO of Alameda Research, has been compelled to transfer nearly all of her assets to FTX creditors to obtain court sanction for a settlement.
Ellison’s motion, submitted on October 7, seeks authorization for the settlement in which she consents to the transfer of any assets that were not forfeited to the government in her criminal case or spent on legal fees.
The document stated that “Ellison will have no remaining assets other than certain physical personal property” once the terms are met. However, it did not specify the value of the assets in question.
Ellison has also consented to participate in FTX’s legal proceedings and investigations. This may entail disseminating documents or information that she acquired during her time as the head of Alameda Research and as an erstwhile associate of FTX founder Sam Bankman-Fried.
According to FTX, the settlement is as advantageous as pursuing Ellison in a distinct court case, as it “will recover substantially all of Ellison’s assets,” and her cooperation adds substantial value. The company acknowledged that litigation would deplete Ellison’s remaining resources and incur additional costs.
Ellison was sued by the bankruptcy estate of FTX in July 2023, who alleged that he had violated fiduciary duties, squandered corporate assets, and made fraudulent transfers.
They intended to recoup $22.5 million in bonus payments from February 2022 and $6.3 million in bonus payments from 2021. Ellison purportedly receives call options and FTX equity, as indicated in the most recent filing. November 20 is the date of the proposed settlement hearing.
On September 24, Ellison was granted a two-year reduction in her sentence for her cooperation with federal prosecutors in the criminal case against Bankman-Fried.
Bankruptcy Judge John Dorsey authorized FTX’s bankruptcy plan on October 7. As of November 2022, when FTX filed for bankruptcy, it is anticipated that former customers and crypto holders will receive a return of 118% to 142% of the value of their claims.
