FTX customers drop claims against Sam Bankman-Fried

Former FTX CEO Sam Bankman-Fried has reached a preliminary settlement agreement with a group of FTX customers who have decided to drop their class action lawsuit against him.

The settlement, which is pending judicial approval in a Miami court, stipulates that Bankman-Fried will be released from current and future civil liabilities related to the collapse of FTX.

Under the terms of the agreement, Bankman-Fried is expected to assist the plaintiffs’ legal team by providing testimony and documents that could help in recovering losses for the victims. This includes pursuing litigation against celebrity endorsers and venture capital firms that promoted FTX. Additionally, he is to supply financial details and documents about his personal assets and his firm’s 2021 investments, such as in AI startup Anthropic.

This agreement follows Bankman-Fried’s recent conviction on fraud charges and his 25-year prison sentence, from which he has filed an appeal.

Similar settlement agreements have been reached with other associated figures from FTX, including Caroline Ellison, Nishad Singh, Gary Wang, and FTX lawyer Dan Friedberg.

Meanwhile, smaller celebrity promoters such as YouTubers Andrei Jikh, Graham Stephan, Jaspreet Singh, Tom Nash, Brian Jung, and Jeremy Lefebvre have also settled, contributing a total of $1.4 million to a fund supporting the lawsuit. Jacksonville Jaguars quarterback Trevor Lawrence, who endorsed FTX’s Blockfolio in 2022 for $500,000, settled with the plaintiffs last year.

However, high-profile promoters like Tom Brady, Steph Curry, Shaquille O’Neill, Naomi Osaka, Shohei Otani, and Gisele Bundchen, along with numerous venture capital firms, continue to contest the lawsuit.

Earlier this month, Sam Bankman-Fried filed an appeal against both his conviction and subsequent 25-year prison sentence handed down by Judge Lewis Kaplan of the U.S. District Court for the Southern District of New York.

The appeal was expected by several legal experts, and it follows Bankman-Fried’s sentencing on March 28. Judge Kaplan ordered Bankman-Fried to repay up to $11 billion to cover investor and lender losses, citing perjury during the trial and acknowledging the defendant’s awareness of his wrongful actions.

The defense highlighted Bankman-Fried’s remorse and concerns over his safety within the prison system.

Despite there being no parole in federal cases, Bankman-Fried could reduce his sentence to as low as 12.5 years through the First Step Act, which allows for sentence reduction for nonviolent federal inmates. Although the legislation originally aimed to reduce prison time for minority offenders, it has benefited white-collar criminals as well.

Furthermore, Judge Kaplan ordered Bankman-Fried to forfeit $11.02 billion, a sum that will likely include all of his available assets. Despite the vast number of victims involved, no restitution will be pursued due to practicality concerns.