FTX has filed a motion seeking approval for a settlement agreement with former Alameda Research boss Caroline Ellison that would see her turn over “substantially all of her assets.”
The motion, filed on Oct. 7, requests the court authorize a settlement with Ellison, who agreed to transfer any assets not forfeited to the government in her criminal case or used for legal fees to FTX creditors.
The motion noted that once she meets the terms, “Ellison will have no remaining assets other than certain physical personal property,” but did not specify the value of the assets she would forfeit.
She also agreed to cooperate with the bankrupt crypto exchange’s investigations and court cases, which may include sharing documents or knowledge she gained as the former head of FTX’s sister trading firm and ex-girlfriend of the exchange’s founder, Sam Bankman-Fried.
FTX argued that the settlement is as beneficial as continuing to pursue Ellison in an adjacent court case because it gives “substantially all that they could recover” anyway, and her additional cooperation provides significant value.
They noted that pursuing litigation would just deplete Ellison’s remaining resources and cost time and money.
Excerpt from FTX’s motion. Source: Kroll
FTX’s bankruptcy estate sued Ellison in July 2023, alleging breaches of fiduciary duties, waste of corporate assets and fraudulent transfers.
They sought to recover $22.5 million in bonus payments dated to February 2022 and $6.3 million in bonus payments from 2021.
Additionally, the latest filing mentions call options and FTX equity fraudulently transferred to Ellison.
A hearing on the proposed settlement is scheduled for Nov. 20
Related: US gov’t cites Caroline Ellison’s ‘extraordinary cooperation’ before sentencing
Ellisis cooperated with federal prosecutors in the criminal case against Bankman-Fried and received a reduced sentence of two years on Sept. 24 for her role in the fraud.
Bankruptcy Judge John Dorsey approved FTX’s bankruptcy plan on Oct. 7. Former customers and crypto holders are set to recover between 118% and 142% of the value of their claims as of November 2022 when FTX filed for bankruptcy.
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