FTX, the bankrupt cryptocurrency exchange, has reached a significant settlement to pay $12.7 billion to customers affected by fraud orchestrated by its founder, Sam Bankman-Fried.

This settlement concludes a 20-month lawsuit initiated by the Commodity Futures Trading Commission (CFTC) in December 2022, which accused FTX and Bankman-Fried of fraud that resulted in $8 billion in customer losses.

Initially, the CFTC sought a claim of $52.2 billion but agreed to the settlement contingent upon FTX's compliance with its reorganization plan.

The repayment order is part of a broader bankruptcy liquidation process aimed at compensating customers impacted by FTX's collapse in late 2022.

Creditors with claims of up to $50,000 are expected to receive approximately 118% of their validated claims, including interest, while non-governmental creditors are projected to be repaid 100% of their validated claims.

Liquidators estimate that recovered assets from FTX and Alameda could total between $14.5 billion and $16.3 billion, facilitating full repayment to non-government creditors.

FTX's current reorganization plan proposes a 118% return for 98% of its creditors with claims under $50,000, based on asset values at the time of bankruptcy filing.

The court has issued a consent order in the FTX and Alameda cases, effectively concluding the CFTC's lawsuit.

CFTC chairman Rostin Behnam has voiced concerns that without regulatory clarity, fraudulent activities in the cryptocurrency sector are likely to persist.

The fallout from FTX's collapse has led to the bankruptcy of several related companies, including BlockFi and Voyager.

FTX is required to fully cooperate with the CFTC in any related investigations, providing necessary documents and testimony.