Case 1:22-cv-10503-PKC

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORKCOMMODITY FUTURES TRADINGCOMMISSION,

Case No. 1:22-cv-10503-PKC

Plaintiff,v.
SAMUEL BANKMAN-FRIED, FTX TRADINGLTD D/B/A FTX.COM, ALAMEDARESEARCH LLC, CAROLINE ELLISON,
AND ZIXIAO “GARY” WANG,CONSENT ORDER FOR
PERMANENT INJUNCTION AND
OTHER EQUITABLE RELIEF
AGAINST DEFENDANTS FTX
TRADING LTD. d/b/a FTX.COM
AND ALAMEDA RESEARCH LLC

Defendants.

INTRODUCTIONOn December 21, 2022, Plaintiff Commodity Futures Trading Commission(“Commission” or “CFTC”) filed an Amended Complaint for Injunctive and Other Equitable
Relief and for Civil Monetary Penalties Under the Commodity Exchange Act and Commission
Regulations (“Amended Complaint,” ECF No. 13) against Defendants Samuel Bankman-Fried(“Bankman-Fried”), FTX Trading Ltd. d/b/a FTX.com (“FTX Trading”), Alameda Research
LLC (“Alameda”), Caroline Ellison (“Ellison”) and Zixiao “Gary” Wang (“Wang”) (collectively,“Defendants”), for violations of the Commodity Exchange Act (“Act”), 7 U.S.C. §§ 1–26, andthe Commission’s Regulations (“Regulations”) promulgated thereunder, 17 C.F.R. pts. 1–190(2022).1
On December 23, 2022, the Court entered consent orders of judgment on liability against Defendants
Wang and Ellison. ECF Nos. 25 and 26. In a related case, the Court entered a consent order of judgment
as to liability and partial injunctive relief against former FTX executive Nishad Singh. CFTC v. Singh,
Case No. 23-CV-1684 (S.D.N.Y. April 13, 2023), ECF No. 17. These orders impose permanent injunctive
relief but reserve the issues of monetary relief or further remedies under Section 6c of the Act, 7 U.S.C.
§ 13a-1 for determination by the Court separately upon motion of the Commission or by a proposed
consent order.
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CONSENTS AND AGREEMENTS
To effect settlement of all charges alleged in the Amended Complaint against Defendants
FTX Trading and Alameda (together referred to as the “FTX Entity Defendants”) without a trial
on the merits or any further judicial proceedings, the FTX Entity Defendants:
1.

Consent to the entry of this Consent Order for Permanent Injunction and Other

Equitable Relief Against the FTX Entity Defendants (“Consent Order”);
2.

Affirm that they have read and agreed to this Consent Order voluntarily, and thatno promise, other than as specifically contained herein, or threat, has been made by the CFTC or
any member, officer, agent or representative thereof, or by any other person, to induce consent tothis Consent Order;
3.

Acknowledge service of the summons and Amended Complaint;

4.

Admit the jurisdiction of this Court over them and the subject matter of this action

pursuant to Section 6c of the Act, 7 U.S.C. § 13a-1;
5.

Admit the jurisdiction of the CFTC over the conduct and transactions at issue inthis action pursuant to the Act;
6.

Admit that venue properly lies with this Court pursuant to Section 6c(e) of theAct, 7 U.S.C. § 13a-1(e);7.

Acknowledge that on November 11, 2022, they initiated Chapter 11 bankruptcy

proceedings pending in the United States Bankruptcy Court for the District of Delaware(“Bankruptcy Court”) captioned In re FTX Trading Ltd., Case No. 22-11068 (JTD) (“FTX
Bankruptcy Proceeding”);
8.

Waive:(a) Any and all claims that they may possess under the Equal Access toJustice Act, 5 U.S.C. § 504 and 28 U.S.C. § 2412, and/or the rules
promulgated by the Commission in conformity therewith, Part 148 of the2Case 1:22-cv-10503-PKC

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Regulations, 17 C.F.R. pt. 148 (2023), relating to, or arising from, thisaction;(b) Any and all claims that they may possess under the Small Business
Regulatory Enforcement Fairness Act of 1996, Pub. L. No. 104-121, tit. II,§§ 201–253, 110 Stat. 847, 857–74 (codified as amended at 28 U.S.C.
§ 2412 and in scattered sections of 5 U.S.C. and 15 U.S.C.), relating to, or
arising from, this action;(c) Any claim of Double Jeopardy based upon the institution of this action or
the entry in this action of any order imposing a civil monetary penalty or
any other relief, including this Consent Order; and(d) Any and all rights of appeal from this Consent Order;
9.

Acknowledge that the Commission is the prevailing party in this action for

purposes of the waiver of any and all rights under the Equal Access to Justice Act specified insubpart (a) of Paragraph 8;
10.

Subject to the provisions in paragraph 77 below, consent to the continued

jurisdiction of this Court over them for the purpose of implementing and enforcing the terms andconditions of this Consent Order and for any other purpose relevant to this action, even if theFTX Entity Defendants now or in the future reside outside the jurisdiction of this Court;
11.

Agree that they will not oppose enforcement of this Consent Order on the ground,

if any exists, that it fails to comply with Rule 65(d) of the Federal Rules of Civil Procedure andwaive any objection based thereon;
12.

Stipulate that for purposes of exceptions to discharge under 11 U.S.C.

§ 1141(d)(6) (excepting from discharge debts of a kind specified in 11 U.S.C. § 523(a)(2)(A) or(2)(B)), that the findings of fact in this Consent Order are true and admitted by the FTX Entity
Defendants, and that the monetary component of the judgment in this Consent Order for
restitution is a debt for violation by the FTX Entity Defendants of federal commodities laws;

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13.

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Consent to the use of the Findings of Fact and Conclusions of Law in this Consent

Order in this proceeding and in any other proceeding brought by the Commission or to which theCommission is a party or claimant, and agree that they shall be taken as true and correct and be
given preclusive effect therein, without further proof; provided, however, that nothing in thisConsent Order shall affect the FTX Entity Defendants’ (a) testimonial obligations, or (b) right totake legal or factual positions in litigation or other proceedings to which the Commission is notparty;
14.

Do not consent, however, to the use of this Consent Order, or the Findings of Fact

and Conclusions of Law herein, as the sole basis for any other proceeding brought by theCommission or to which the Commission is a party, other than a: proceeding in bankruptcy, or
receivership; or proceeding to enforce the terms of this Order; and15.

Subject to the provisions in paragraph 77 below, agree that no provision of thisConsent Order shall in any way limit or impair the ability of any other person or entity to seek
any legal or equitably remedy against the FTX Entity Defendants in any other proceeding.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
The Court finds that there is good cause for the entry of this Consent Order and that
there is no just reason for delay. The Court therefore directs the entry of the following Findingsof Fact, Conclusions of Law, permanent injunction and equitable relief pursuant to Section 6c of
the Act, 7 U.S.C. § 13a-1, as set forth herein. The findings and conclusions in this Consent
Order are not binding on any other party to this action.

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THE PARTIES AGREE AND THE COURT FINDS:
A. Findings of Fact
16.

Plaintiff CFTC is an independent federal regulatory agency charged by Congresswith administering and enforcing the Act and the Regulations.
17.

FTX Trading is a corporation organized in Antigua and Barbuda. FTX Trading,along with various subsidiaries and affiliate entities, including, without limitation, FTX DigitalMarkets Ltd., collectively did business as “FTX.com” or “FTX,” and operated a digital asset
derivatives trading exchange beginning no later than May 2019 and continuing through at least
November 11, 2022 (“Relevant Period”).2 FTX Trading has never been registered with theCommission in any capacity. FTX Trading is currently a debtor in the FTX Bankruptcy
Proceeding.
18.

Alameda is a Delaware limited liability company. During the Relevant Period,

Alameda, along with various subsidiaries and affiliate entities, did business as “Alameda,” andoperated as a digital asset trading and investment firm. Alameda has never been registered with
the Commission in any capacity. Alameda is currently a debtor in the FTX Bankruptcy
Proceeding.
19.

Alameda was founded by Bankman-Fried in November 2017 and initiallyoperated from Berkeley, California. Alameda maintained an office in the United States at times,
and certain Alameda employees were based in or performed work from the United States.
Bankman-Fried had a 90% ownership interest in Alameda.
20.

By late 2018, Bankman-Fried and others employed at Alameda had begun

building the centralized digital asset derivatives exchange that would ultimately become FTX

2This order uses “FTX” to refer to the group of entities that collectively did business as FTX.com.

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Trading. Certain FTX Trading employees, including key personnel, were based in or performed
work from the United States, including in this District. FTX Trading regularly engaged inadvertising and promotional activities in the United States. Bankman-Fried was the ultimate
owner of the majority of the shares of FTX Trading.
21.

Bankman-Fried regularly signed core corporate agreements for the FTX Entity

Defendants. Bankman-Fried was also a signatory on bank accounts for the FTX Entity
Defendants, and an authorized person on Alameda trading accounts. The FTX Entity Defendants
held certain bank and trading accounts at banks and trading firms in the United States.
22.

The FTX Entity Defendants co-mingled assets deposited by customers with othercorporate assets; failed to properly document intercompany transfers of assets; and regularly
shared employees, office space, systems, accounts and communications channels. Assets wereregularly transferred between the FTX Entity Defendants, often without documentation oreffective tracking.
23.

Bankman-Fried was CEO of Alameda until August 2021, at which time heappointed Ellison and another individual as co-CEOs to replace him.
24.

Even after August 2021, Bankman-Fried remained a signatory on Alameda’s bankaccounts and an authorized trader for Alameda’s accounts with CFTC-registered futurescommission merchants. Bankman-Fried also maintained direct decision-making authority over
all of Alameda’s major trading, investment, and financial decisions.
25.

Alameda acted as “market maker” and “liquidity provider” in certain digital asset

markets, including markets on FTX after its launch. Alameda also made large equity
investments in various companies in the digital asset industry. These activities were often

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facilitated by large loans Alameda obtained from digital asset lending platforms and othersources.
26.

In April 2019, the FTX.com website was launched and trading on the FTX

platform was made available to the public. FTX offered trading in many digital assets, including
digital asset commodities such as bitcoin (BTC), ether (ETH), tether (USDT), and others. FTX
operated primarily as a derivatives exchange and offered trading in various options, futures,
swaps, “perpetual futures” and other digital asset commodity derivative products.
27.

FTX allowed customers to place buy (long) and sell (short) orders in an electronicorder book and matched customer orders via its “trading engine” or “matching engine.” FTX
also offered many additional services related to the trading of digital asset products. For
example, FTX operated a peer-to-peer margin lending program where customers could offer
margined and leveraged offerings to one another.
28.

Customers could access the FTX trading platform through the FTX.com website,through a mobile application, and through an Application Programming Interface (API). FTX
also offered an off-exchange “over the counter” (OTC) portal that enabled customers to connect
and request quotes for spot digital assets and trade directly with Alameda, rather than using the
FTX central limit order book.
29.

In marketing materials and in communications with federal regulators, including

the CFTC, and others, FTX touted its auto-liquidation risk management engine, cross-margin
functionality and backstop liquidity provider (“BLP”) programs as unique features that limited
risk. Alameda was a leading participant in the BLP program.
30.

FTX relied on Alameda resources, assets and personnel to carry out many corefunctions for the FTX platform, including creating liquid submarkets for products offered on

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FTX, maintaining a balance of various digital assets on the exchange and supporting the peer-topeer margin lending program. Alameda likewise relied on various FTX resources, assets andpersonnel.
31.

When Bankman-Fried and others launched the FTX trading platform in 2019,

FTX did not establish bank accounts to accept and hold customer deposits. Instead, customers
seeking to deposit “fiat” currency (i.e., traditional government-issued currency) into their FTX
accounts were directed to wire their fiat deposits to bank accounts that were owned andcontrolled by Alameda. Some of those bank accounts were opened in the name of an entity
called North Dimension, Inc., a Delaware-registered wholly owned subsidiary of Alameda.
Certain of these bank accounts were held with banks located in and/or based in the United States.
32.

Once received, assets deposited by FTX customers often were not segregatedfrom Alameda assets. When FTX customers deposited assets into Alameda bank accounts, FTX
personnel generally credited FTX customer accounts with the corresponding amount of fiat
currency on an internal ledger system. Customers accessing their FTX accounts could observeon the exchange’s website (and later mobile application) that their deposits had been posted totheir FTX accounts, even though the fiat deposits often remained in Alameda bank accounts.
33.

Alameda personnel also had the ability to access FTX digital assets, including

digital assets deposited by customers and held in FTX digital asset “hot” (online) wallets, via thewithdrawal capabilities of its FTX account. Alameda’s role in this process and thecorresponding access granted to Alameda was not disclosed to FTX customers.
34.

The Alameda-owned bank accounts holding fiat assets deposited by FTX

customers were collectively reflected on FTX’s internal ledger systems as the “fiat@ftx”

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account. This internal account reflected a balance of as much as $11 billion in assets at certain
times before the collapse of FTX in November 2022.
35.

Although FTX had opened its own FBO (for the benefit of customers) fiat bankaccounts in 2020, some deposits from FTX customers continued to be received in Alameda bankaccounts even after 2020.
36.

From the launch of FTX, Alameda accessed and used assets deposited by FTX

customers for Alameda’s operations and activities, including to fund certain Alameda trading,investment and borrowing/lending activities. Alameda’s use of assets deposited by FTX
customers included both fiat deposits that were sent to Alameda bank accounts and digital asset
deposits and holdings that Alameda accessed via the essentially unbounded withdrawal
capabilities of its FTX account.
37.

Alameda’s use of FTX exchange assets deposited by FTX customers was not

authorized by FTX customers, and FTX customers were not made aware that these assets werebeing used by Alameda. To the contrary, FTX’s Terms of Service expressly prohibited such useof exchange assets. Section 8.2.6 of the FTX Trading Terms of Service stated:
All Digital Assets are held in your Account on the following basis:(A)
Title to your Digital Assets shall at all times remain with you andshall not transfer to FTX Trading. As the owner of Digital Assets in yourAccount, you shall bear all risk of loss of such Digital Assets. FTX Trading
shall have no liability for fluctuations in the fiat currency value of Digital
Assets held in your Account.
(B)
None of the Digital Assets in your Account are the property of, orshall or may be loaned to, FTX Trading; FTX Trading does not represent or
treat Digital Assets in User’s Accounts as belonging to FTX Trading.
(C)
You control the Digital Assets held in your Account. At any time,
subject to outages, downtime, and other applicable policies (including theTerms), you may withdraw your Digital Assets by sending them to adifferent blockchain address controlled by you or a third party.

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38.

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Bankman-Fried and other representatives of FTX publicly stated that assets

deposited by customers were properly segregated and custodied by FTX. For example, during
February 9, 2022 testimony before the United States Senate Committee on Agriculture, Nutrition
and Forestry, Bankman-Fried, while advocating for the implementation of legislation regarding
digital assets and the extension of certain legal protections to digital asset exchanges, testified asfollows about FTX’s treatment of customer deposits:
FTX has policies and procedures for its platforms today that reflect thisbasic principle by maintaining liquid assets for customers withdrawals,
including a sufficient balance of digital assets funded by the company for
its non-U.S. platform. The resources are funded to provide sufficient coveragainst user losses under certain events and extreme scenarios in order to,among other purposes, ensure a customer without losses can redeem its
assets from the platform on demand.
[…]
In keeping with this principle, FTX provides a user experience that enables
any user to easily view account balances for all assets, for all of its
platforms, in real time. By logging in to the customer’s account at FTX, thecustomer can immediately view the types of assets they own held in custody
by FTX. The assets are ledgered and easily identifiable to the user (but held
in an omnibus wallet in the case of the customer’s tokens in order to better
promote liquidity on the platform) pursuant to internal policies andprocedures, and FTX regularly reconciles customers’ trading balances
against cash and digital assets held by FTX. Additionally, as a generalprinciple FTX segregates customer assets from its own assets across ourplatforms.
39.

Contrary to such representations and without disclosure to FTX customers, theFTX Entity Defendants commingled assets and freely used assets deposited by FTX customers
as if they were Alameda’s assets, including as capital to deploy in Alameda’s own trading andinvestment activities.
40.

Commingled FTX assets, including assets deposited by FTX customers, were also

used by Bankman-Fried and FTX for extensive marketing and promotional expenses in the
United States, including a Super Bowl commercial and the sponsorship of a sports stadium in10

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Miami, Florida. Many of these advertisements, including the Super Bowl commercial, touted“FTX” as “the safest and easiest way to buy and sell crypto.” Some of these promotional
activities were paid for by FTX.
41.

Throughout the Relevant Period, Alameda’s account on FTX had a special

designation in the FTX code, labeled an “Allow Negative” flag, which allowed Alameda towithdraw an unlimited amount of digital assets from the FTX.com exchange while having a netnegative account balance, and exempted Alameda’s account from the automatic liquidation
process. In addition, Alameda’s borrowing limit was set to $65 billion. Taken together,
Alameda’s $65 billion borrowing limit and the Allow Negative privilege gave Alameda theunique ability to borrow and withdraw digital assets directly from FTX.
42.

Alameda’s ability to withdraw virtually unlimited assets from FTX was not

publicly disclosed until December 2022.
43.

During the Relevant Period, Alameda used large amounts of capital, including

some misappropriated assets, to acquire equity holdings in a variety of digital asset companies
and relatively illiquid digital assets. One of Alameda’s most significant holdings was the FTXToken (“FTT”) digital asset. FTT was the FTX “exchange token” and was used, among otherthings, to obtain discounted trading fees for transactions on FTX.
44.

Alameda’s FTT holdings represented a significant portion of its balance sheet,

and also represented a significant portion of all FTT in circulation during the Relevant Period.
Alameda generally valued its FTT holdings on its balance sheet at the market price at which FTT
was traded, without applying an appropriate discount to reflect that it could not have sold its
significant FTT holdings into the marketplace without causing a sharp reduction in its trading
price.

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Alameda also held extremely large quantities of several other illiquid digitalassets relative to their circulation volumes, and likewise did not apply appropriate discounts tothe values of those holdings on its balance sheet.
46.

Alameda relied on its significant holdings of FTT and similar illiquid tokens,valued at the market value of the asset without appropriate discounts, as collateral to support
several large loans from various digital asset lending platforms. During the Relevant Period,
Alameda took out many loans, at times totaling more than $10 billion in notional value.
47.

By early 2022, Alameda had invested several billion dollars in directional,

unhedged, illiquid and/or long-term investments. To fund these investment activities, Alameda
relied on billions of dollars of loans from digital asset lending platforms, traditional bank lines ofcredit and its unlimited borrowing abilities on FTX, including its access to assets that had been
deposited by FTX customers.
48.

During the spring of 2022, the digital asset markets as a whole experienced asignificant downturn. This downturn came to a head in May 2022 with the crash of two
significant and widely traded digital assets, whose value was essentially reduced to zero.
49.

During May and June of 2022, Alameda was subject to a number of margin calls

and loans that were called. Alameda did not have enough liquid assets to meet these obligations.
Instead, Alameda increased its usage of assets deposited by customers to meet its external debt
obligations. Alameda relied on its undisclosed ordinary-course access to these assets through its
FTX account to facilitate these large withdrawals, which were several billion dollars in notional
value.
50.

By about mid-2022, FTX’s internal ledgers reflected that the balance ofAlameda’s USD fiat liability to FTX totaled approximately $8 billion.

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51.

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During this time, public statements made by Bankman-Fried and other FTX andAlameda executives falsely portrayed that FTX and Alameda remained highly profitable andliquid.
52.

Following the market crash of May 2022, Bankman-Fried, through Alameda andother entities, bailed out several digital asset companies with loans or acquisitions, funded in partor in whole by assets that had been deposited by FTX customers.
53.

At Bankman-Fried’s direction, FTX executives concealed Alameda’s

approximately $8 billion in USD fiat liabilities by reallocating them to a customer account on
FTX’s systems that Bankman-Fried would later refer to as “our Korean friend’s account” and“the weird Korean account.” This account was initially opened as a sub-account of Alameda’s
main FTX account, but was later reassigned to be associated with another account that was nototherwise readily identifiable as being an Alameda-associated account. The system notes
associated with the account described it as “ftx-fiat-old.” As a result, it was no longer apparent
on FTX’s ledgers that Alameda had an $8 billion USD fiat negative balance on its FTX account.
54.

The same type of “Allow Negative” flag and exemption from liquidation

characteristics that applied to the Alameda accounts also applied to the so-called “weird Korean
account.”
55.

On November 2, 2022, the online digital asset news publication Coindesk.com

published an article titled “Divisions in Sam Bankman-Fried’s Crypto Empire Blur on His
Trading Titan Alameda’s Balance Sheet,” and subtitled: “Alameda had $14.6 billion of assets asof June 30, according to a private document CoinDesk reviewed. Much of it is the FTT token
issued by FTX, another Bankman-Fried company.” This article reported on a purported leaked13

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Alameda balance sheet that showed that, at least as of June 30, 2022, an extremely high portionof Alameda’s $14.6 billion in assets consisted of FTT.
56.

At the same time, many FTX customers began requesting to withdraw assets fromthe exchange.
57.

By late in the day on November 7, 2022, FTX lacked sufficient assets to cover all

incoming customer withdrawal requests, and there were not sufficient assets held in various FTX
accounts to cover all customer obligations.
58.

Bankman-Fried, Ellison, and other key personnel of the FTX Entity Defendants

acknowledged internally that this shortfall was not merely a matter of having sufficient liquid
assets on hand to cover customer withdrawals in the short term; rather, funds and digital assets
deposited by customers were not available because those funds and digital assets had been
misappropriated.
59.

During this same period, Alameda traders were directed by Bankman-Fried andEllison to sell everything that could be sold quickly from Alameda’s holdings, to maximize open
lines of credit or any other available sources of capital, and generally do anything possible toquickly obtain billions of dollars in assets to send to FTX to satisfy customer withdrawal
requests.
60.

In public statements and various Twitter messages, Bankman-Fried and others

acting on behalf of FTX continued to portray the shortfall as a liquidity problem. BankmanFried falsely stated that FTX continued to be solvent and that all customer deposits were safe.
61.

While Bankman-Fried was making these public assurances, he and others acting

on behalf of FTX were also reaching out to as many sources of funding as possible in an attempt14

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to quickly raise several billion dollars to cover the shortfall in assets owed to others. Numerous
parties declined to bail out FTX regardless of the favorable terms being offered.
62.

At about this same time, Bankman-Fried and others prepared or caused to beprepared a balance sheet to be shared with prospective investors showing the assets and liabilitiesof the companies. That balance sheet was unorthodox in several respects. Most notably, thebalance sheet included an $8 billion negative balance attributed to a “hidden, poorly internallylabeled ‘fiat@’ account.”
63.

On the morning of November 9, 2022 around 10 AM ET, Ellison, in her capacity

as Alameda’s CEO, held an “all-hands” meeting with Alameda staff. In that meeting, Ellison
acknowledged that earlier that year, she, Bankman-Fried and other individuals had decided touse assets deposited by FTX customers to pay Alameda’s debts, and that certain other senior
FTX executives were aware of this. In that meeting, Ellison stated that “starting last year”
Alameda had been “borrowing a bunch of money by open term loans” and used those assets to“make very illiquid investments.” Ellison added that following the widespread decline of digitalasset prices, most of Alameda’s loans had been called, and that to meet those calls, Alameda hadborrowed “a bunch of funds” from FTX, which in turn “led to FTX having a shortfall in user
funds.” Ellison informed Alameda staff that FTX had “always allowed” Alameda to borrowassets deposited by customers, and did not require collateral for those loans. She also explainedthat Alameda could access assets deposited by FTX customers without requiring FTX’s approvalas the “structure” of the FTX exchange allowed Alameda to “go negative in coins.” Shortly after
this meeting, most of Alameda’s staff resigned.

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On November 8, 2022, FTX halted withdrawals, and Bankman-Fried announced

on November 10 that Alameda was being wound down. Bankman-Fried also posted a lengthy
Twitter thread purporting to explain how he “f[***]ed up.”
65.

On November 11, 2022, at about 4:30 am ET, Bankman-Fried signed a document

resigning his position as CEO of FTX and, as majority owner of all the FTX and Alameda
companies, authorizing the appointment of an independent CEO with plenary authority to file for
Chapter 11 bankruptcy proceedings.
66.

On November 11 and 14, 2022, 102 separate companies affiliated with FTX,

including the FTX Entity Defendants, commenced the FTX Bankruptcy Proceeding.
67.

In his “first day” declaration submitted shortly after the filing of the FTXBankruptcy Proceeding, the new and independent FTX CEO said the following of the situation:
I have over 40 years of legal and restructuring experience. I have been the Chief
Restructuring Officer or Chief Executive Officer in several of the largest
corporate failures in history. I have supervised situations involving allegationsof criminal activity and malfeasance (Enron). I have supervised situations
involving novel financial structures (Enron and Residential Capital) and crossborder asset recovery and maximization (Nortel and Overseas Shipholding).
Nearly every situation in which I have been involved has been characterized by
defects of some sort in internal controls, regulatory compliance, humanresources and systems integrity.
Never in my career have I seen such a complete failure of corporate controls andsuch a complete absence of trustworthy financial information as occurred here.
From compromised systems integrity and faulty regulatory oversight abroad, tothe concentration of control in the hands of a very small group of inexperienced,
unsophisticated and potentially compromised individuals, this situation isunprecedented.

B. Conclusions of Law
68.

This Court has jurisdiction over this action pursuant to 28 U.S.C. § 1331

(codifying federal question jurisdiction) and 28 U.S.C. § 1345 (providing that U.S. district courts
have original jurisdiction over civil actions commenced by the United States or by any agency

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expressly authorized to sue by Act of Congress). Section 6c of the Act, 7 U.S.C. § 13a-1, which
provides that whenever it shall appear to the CFTC that any person has engaged, is engaging, oris about to engage in any act or practice constituting a violation of any provision of the Act or
any rule, regulation, or order promulgated thereunder, the CFTC may bring an action in theproper district court of the United States against such person to enjoin such act or practice, or to
enforce compliance with the Act, or any rule, regulation or order thereunder.
69.

Venue properly lies with this Court pursuant to Section 6c(e) of the Act, 7 U.S.C.

§ 13a-1(e), because acts and practices in violation of the Act occurred within this District.
70.

By the conduct described above and in the Amended Complaint, the FTX Entity

Defendants, acting together as a common enterprise, violated Section 6(c)(1) of the Act, 7 U.S.C.
§ 9(1), and Regulation 180.1(a) (1) and (3), 17 C.F.R. § 180.1(a)(1), (3) (2023), by intentionallyor recklessly, in connection with swaps and contracts of sale of commodities in interstate
commerce, employing a scheme or artifice to defraud; and engaging in acts, practices, and acourse of business that operated as a fraud or deceit on FTX customers, digital asset lenders to
Alameda, and other market participants. The acts, omissions, and failures of Bankman-Fried,
Ellison, and other officers, employees or agents acting for the FTX Entity Defendants were done
within the scope of their office, employment or agency and therefore, pursuant to 7 U.S.C. §2(a)(1)(B) and 17 C.F.R. § 1.2 (2023), the FTX Entity Defendants are liable for each violation ofSection 6(c)(1) of the Act and Regulation 180.1(a)(1), (3) they committed.
71.

By the conduct described above and in the Amended Complaint, the FTX Entity

Defendants, acting together as a common enterprise, violated Section 6(c)(1) of the Act, 7 U.S.C.
§ 9(1), and Regulation 180.1(a)(2), 17 C.F.R. § 180.1(a)(2) (2023), by intentionally or recklessly,
in connection with swaps and contracts of sale of commodities in interstate commerce, making

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untrue or misleading statements of material fact, and omitting to state material facts necessary to
make the statements made not untrue or misleading. The acts, omissions, and failures ofBankman-Fried, Ellison, and other officers, employees or agents acting for the FTX Entity
Defendants were done within the scope of their office, employment or agency and therefore,
pursuant to 7 U.S.C. § 2(a)(1)(B) and 17 C.F.R. § 1.2 (2023), the FTX Entity Defendants areliable for each violation of Section 6(c)(1) of the Act and Regulation 180.1(a)(2) they committed.
72.

Unless restrained and enjoined by this Court, there is a reasonable likelihood that

the FTX Entity Defendants will continue to engage in the acts and practices alleged in the
Amended Complaint and in similar acts and practices in violation of the Act and Regulations.
PERMANENT INJUNCTION
IT IS HEREBY ORDERED THAT:73.

Based upon and in connection with the foregoing conduct described in the

Findings of Fact and Conclusions of Law, pursuant to Section 6c of the Act, 7 U.S.C. § 13a-1,
the FTX Entity Defendants, and any of their affiliates, agents, servants, employees, successors,
assigns, attorneys and persons in active concert or participation with them, are permanently
restrained, enjoined and prohibited from directly or indirectly:
a. Cheating or defrauding, or attempting to cheat or defraud, willfully deceiving or
attempting to deceive, customers or other persons by, among other things,
intentionally or recklessly, in connection with any swap, or contract of sale or any
commodity in interstate commerce, or contract for future delivery on or subject tothe rules of any registered entity, directly or indirectly:

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Page 19 of 28i. using or employing, or attempted to use or employ, a scheme or artifice
to defraud in violation of Section 6(c)(1) of the Act, 7 U.S.C. § 9(1), andRegulation 180.1(a)(1), 17 C.F.R. § 180.1(a)(1) (2023);
ii. making untrue or misleading statements of material fact, or omitting tostate material facts necessary to make the statements made not untrue or
misleading in violation of Section 6(c)(1) of the Act, 7 U.S.C. § 9(1),and Regulation 180.1(a)(2), 17 C.F.R. § 180.1(a)(2) (2023); andiii. engaging or attempting to engage in acts, practices, or a course ofbusiness that operates or would operate as a fraud or deceit on any
person, in violation of Section 6(c)(1) of the Act, 7 U.S.C. § 9(1), andRegulation 180.1(a)(3), 17 C.F.R. § 180.1(a)(3) (2023).
74.

With the exception of any transactions associated with the operation or winding

up of any of the debtors in the FTX Bankruptcy Proceeding under the supervision of, or as
authorized by, the Bankruptcy Court, the FTX Entity Defendants, and any of their affiliates,
agents, servants, employees, successors, assigns, attorneys and persons in active concert orparticipation with them, are also permanently restrained, enjoined and prohibited from directly or
indirectly:
a. Trading on or subject to the rules of any registered entity (as that term is definedin Section 1a(40) of the Act, 7 U.S.C. § 1a(40);b. Entering into any transactions involving “commodity interests” (as that term isdefined in Regulation 1.3, 17 C.F.R. § 1.3 (2023)) or digital asset commodities,
including but not limited to bitcoin (BTC), ether (ETH), or tether (USDT), fortheir own account or for any account in which they have a direct or indirect interest;

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c. Having any commodity interests or digital asset commodities, including but notlimited to bitcoin (BTC), ether (ETH), or tether (USDT), traded on their behalf;d. Controlling or directing the trading for or on behalf of any other person or entity,
whether by power of attorney or otherwise, in any account involving commodity
interests or digital asset commodities, including but not limited to bitcoin (BTC),
ether (ETH), or tether (USDT);e. Soliciting, receiving or accepting any funds from any person for the purpose ofpurchasing or selling any commodity interests or digital asset commodities,
including but not limited to bitcoin (BTC), ether (ETH), or tether (USDT);
f. Applying for registration or claiming exemption from registration with theCommission in any capacity, and engaging in any activity requiring suchregistration or exemption from registration with the Commission, except asprovided for in Regulation 4.14(a)(9), 17 C.F.R. § 4.14(a)(9) (2023); and/or
g. Acting as a principal (as that term is defined in Regulation 3.1(a), 17 C.F.R.
§ 3.1(a) (2023)), agent or any other officer or employee of any person (as thatterm is defined in Section 1a(38) of the Act, 7 U.S.C. § 1a(38)), registered,exempted from registration or required to be registered with the Commission
except as provided for in 17 C.F.R. § 4.14(a)(9).
RESTITUTION AND DISGORGEMENT
75.

Subject to the provisions of paragraph 77 below, FTX Trading and Alameda

shall pay, jointly and severally, restitution of Eight Billion Seven Hundred Million Dollars($8,700,000,000) (“Restitution Obligation”) to persons who sustained losses proximately caused

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by the violations of the Act and Regulations described in the Amended Complaint and thisConsent Order.
76.

Subject to the provisions of paragraph 77 below, FTX Trading and Alameda shallpay, jointly and severally, disgorgement of Four Billion Dollars ($4,000,000,000)(“Disgorgement Obligation”) for gains received in connection with the violations described in
the Amended Complaint and this Consent Order.
77.

The Restitution Obligation and Disgorgement Obligation shall be deemedsatisfied as follows:a. In recognition of the FTX Bankruptcy Proceeding and the distributions to bemade by the FTX Entity Defendants and their affiliated debtor entities inconnection therewith, pursuant to the mutual agreement of the Commission andthe FTX Entity Defendants, the Restitution Obligation and Disgorgement
Obligation shall be credited or payable as provided in the Claim Settlement andSubordination Agreement between the CFTC and the FTX Entity Defendants
filed in the Bankruptcy Proceeding and approved by the Bankruptcy Court (the“Settlement Agreement”) and the “Eligible Plan” referenced therein. The
Commission and the FTX Entity Defendants may agree to amend or modify the
Settlement Agreement at any time without further order of this Court;
b. Pursuant to the Eligible Plan, distributions of the funds or assets in the FTXBankruptcy Proceeding in satisfaction of the Restitution Obligation and
Disgorgement Obligation will be managed by either the Chief Executive Officer
of FTX Trading or the Plan Administrator approved by the Bankruptcy Court in
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Page 22 of 28c. The CEO of the FTX Entity Defendants or Plan Administrator shall provide theCommission at the conclusion of each quarter of each calendar year a reportdetailing the disbursement of funds or assets in satisfaction of the Restitution
Obligation and Disgorgement Obligation. The CEO of the FTX Entity
Defendants or Plan Administrator shall transmit this report under a cover letterthat identifies the name and docket number of this proceeding to the Chief
Financial Officer, Commodity Futures Trading Commission, Three Lafayette
Centre, 1155 21st Street, NW, Washington, D.C. 20581; with a copy to Robert T.
Howell, Deputy Director, Commodity Futures Trading Commission, Ralph
Metcalfe Federal Building, 77 West Jackson Blvd., Ste. 800, Chicago, IL 60604;
d. Within ten days of the final disbursement in the FTX Bankruptcy Proceeding, theFTX Trading CEO or Plan Administrator shall, under a cover letter that identifies
the name and docket number of this proceeding, transmit to the Chief Financial
Officer, Commodity Futures Trading Commission, Three Lafayette Centre, 1155
21st Street, NW, Washington, D.C. 20581, and Robert T. Howell, Deputy
Director, Commodity Futures Trading Commission, Ralph Metcalfe Federal
Building, 77 West Jackson Blvd., Ste. 800, Chicago, IL 60604, a certification of
the final amount of distributions made in satisfaction of the Restitution Obligation
and Disgorgement Obligation;e. The FTX Entity Defendants shall receive a dollar-for-dollar credit against the
Restitution Obligation for any amounts distributed under the Eligible Plan in the
Bankruptcy Proceeding in satisfaction of FTX.com and FTX.US customer claims,
and Alameda lender claims;

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f. The FTX Entity Defendants shall receive a dollar-for-dollar credit against the
Disgorgement Obligation for any amounts distributed towards the CFTC’s
allowed claim for disgorgement in the Bankruptcy Proceeding;g. If the Eligible Plan is fully effectuated and administered, the Restitution
Obligation and Disgorgement Obligation shall be deemed satisfied;h. If the Eligible Plan is not fully effectuated or administered, or the FTXBankruptcy Proceeding is converted to another bankruptcy chapter or isdismissed, any amounts of the Restitution Obligation and Disgorgement
Obligation remaining shall be due and payable and the CFTC reserves the right toassert that these amounts are excepted from discharge under 11 U.S.C. 523(a)(2).
78.

The amounts paid or payable to any persons in connection with this Consent

Order shall not limit the ability of any person from proving that a greater amount is owed from
Defendants in this case or any other person or entity, and nothing herein shall be construed inany way to limit or abridge the rights of any person that exist under state or common law.
79.

To the extent that any funds accrue to the U.S. Treasury for satisfaction of the

Restitution Obligation or Disgorgement Obligation, such funds shall be transferred to the Plan
Administrator for disbursement in accordance with the procedures set forth above.
MISCELLANEOUS PROVISIONS
80.

The FTX Entity Defendants shall cooperate fully and truthfully with the CFTC,

including the CFTC’s Division of Enforcement, in this action, and in any other litigation,
proceeding, or investigation involving possible violations of the Act or Commission Regulations
by any entity or individual related in any way to the FTX Entity Defendants, including any
current or future investigations or litigation related to, or arising from, this action.

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As part of such cooperation, the FTX Entity Defendants, and their affiliates,

agents, servants, employees, successors, assigns, attorneys and persons in active concert orparticipation with the FTX Entity Defendants, shall comply, to the full extent of their abilities,
promptly and truthfully with any inquiries or requests for information including but not limited
to, requests for production of documents and authentication of documents, and shall provide
assistance at any trial, proceeding, or investigation related to the subject matter of this action,
including but not limited to, requests for testimony, depositions, and/or interviews. In any
actions related to the subject matter of this action, representatives of the FTX Entity Defendants,
or of their affiliates, agents, servants, employees, successors, assigns, attorneys and persons in
active concert or participation with the FTX Entity Defendants, are directed to appear in the
judicial district in which such action is pending, or in a suitable judicial district agreed to by theparties, to provide deposition testimony and trial testimony should such testimony be necessary.
82.

Entire Agreement and Amendments: This Consent Order and the Settlement

Agreement, together, incorporate all of the terms and conditions of the settlement between the
CFTC and the FTX Entity Defendants to date. Nothing shall serve to amend or modify thisConsent Order in any respect whatsoever, unless: (a) reduced to writing; (b) signed by all parties
hereto; and (c) approved by order of this Court.
83.

Invalidation: If any provision of this Consent Order or if the application of any

provision or circumstance is held invalid, then the remainder of this Consent Order and theapplication of the provision to any other person or circumstance shall not be affected by theholding.
84.

Waiver: The failure of any party to this Consent Order or of any person at any

time to require performance of any provision of this Consent Order shall in no manner affect the24Case 1:22-cv-10503-PKC

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right of the party or person at a later time to enforce the same or any other provision of thisConsent Order. No waiver in one or more instances of the breach of any provision contained inthis Consent Order shall be deemed to be or construed as a further or continuing waiver of suchbreach or waiver of the breach of any other provision of this Consent Order.
85.

Continuing Jurisdiction of this Court: This Court shall retain jurisdiction of thisaction in order to implement and carry out the terms of this Consent Order, to entertain any
suitable application or motion for additional relief within the jurisdiction of the Court, to assurecompliance with this Consent Order and for all other purposes relevant to this action, including
any motion by the FTX Entity Defendants, or their successors or assigns, to modify or for relief
from the terms of this Consent Order.
86.

Authority: John J. Ray III hereby warrants that he is Chief Executive Officer of

the FTX Entity Defendants, and that this Consent Order has been duly authorized by the FTX
Entity Defendants, and he has been duly empowered to sign and submit this Consent Order onbehalf of the FTX Entity Defendants.
87.

Counterparts and Facsimile Execution: This Consent Order may be executed in

two or more counterparts, all of which shall be considered one and the same agreement and shallbecome effective when one or more counterparts have been signed by each of the parties hereto
and delivered (by facsimile, e-mail, or otherwise) to the other party, it being understood that all
parties need not sign the same counterpart. Any counterpart or other signature to this Consent
Order that is delivered by any means shall be deemed for all purposes as constituting good andvalid execution and delivery by such party of this Consent Order.

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The FTX Entity Defendants’ consent to the entry of the Consent Order does notconstitute a waiver by the FTX Entity Defendants of the automatic stay with respect to any
further action by the CFTC.
89.

The FTX Entity Defendants understand that the terms of the Consent Order are

enforceable through contempt proceedings, and that, in any such proceedings they may not
challenge the validity of this Consent Order.

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There being no just reason for delay, the Clerk of the Court is hereby directed to enter
this Consent Order of Permanent Injunction and Other Equitable Relief Against Defendants FTX
Trading Ltd. d/b/a ftx.com and Alameda Research LLC without further notice.

IT IS SO ORDERED on this 7th day of August, 2024.

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