A judge in New York City has approved an agreement for scandal-ridden FTX and Alameda Research to reimburse defrauded investors $12.7bn.

The bankrupt firms will pay $8.7bn in restitution and $4bn in disgorgement of ill-gotten gains.

The case was brought in December 2022 by the Commodity Futures Trading Commission, a US regulator, against FTX, a crypto exchange, Alameda Research, its sister trading firm, and company executives including Sam Bankman-Fried, after the companies collapsed in November 2022. Bankman-Fried was to 25 years in prison in March 2024 for misappropriating clients funds, defrauding investors and defrauding lenders.

The US federal judge’s , issued on 7 August 2024, permanently bans FTX from trading, holding or “soliciting, receiving or accepting any funds from any person for the purpose of purchasing or selling any commodity interests or digital asset commodities, including but not limited to bitcoin (BTC), ether (ETH), or tether (USDT).”

The CFTC that it did not pursue penalties, meaning the entire $12.7bn settlement can be used to pay back investors and lenders.

The case now turns to a separate bankruptcy court, which may issue an initial ruling on reimbursing creditors during a hearing scheduled on 7 October.