According to court records released Wednesday, bankrupt crypto exchange FTX has negotiated a settlement to collect 97% of the $400 million it transferred to hedge firm Modulo Capital in 2022.
According to a Delaware bankruptcy court filing, Bahamas-based Modulo paid $404 million in cash and relinquished its claim to $56 million in FTX’s crypto exchange assets.
In November, FTX declared bankruptcy, stating it could not fully refund consumers who had placed monies on its exchange. As a result, FTX’s new CEO, John Ray, prioritized asset recovery to reimburse consumers.
According to court records, FTX’s linked hedge fund Alameda Research sent $475 million to Modulo in a series of payments beginning in May 2022, when FTX was losing money and going toward bankruptcy.
According to records, Alameda, under the guidance of FTX founder Sam Bankman-Fried, invested $25 million in Modulo and contributed $450 million to its investment fund.
According to documents, the settlement recovers most of those payments and removes 99% of Modulo’s assets.
The settlement requires FTX and Alameda to relinquish Modulo ownership. In addition, the documents said that FTX would not pursue Modulo or its executives Xiaoyun Zhang and Duncan Rheingans-Yoo for the 2022 payments.
FTX, Bankman-Fried, and Modulo Capital did not reply to inquiries.
FTX has repaid more than $5 billion to insolvent crypto exchange clients. This week, FTX announced it was examining over $3.2 billion taken out of the firm through payments and loans to founders and senior staff.
Bankman-Fried is accused of stealing billions of dollars from FTX customers to cover Alameda Research losses and making millions in unlawful political payments to influence Washington, D.C.
He denies guilt and wants to avoid incarceration until his Oct. 2 fraud trial.
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