According to documents obtained by Reuters, the interim management overseeing the bankruptcy proceedings of cryptocurrency exchange FTX has come to a settlement agreement with Modulo Capital, a hedge fund based in the Bahamas.
Under the agreement, Modulo will pay $404 million to FTX and relinquish claims to $56 million in assets held by the exchange. This will result in FTX recovering 97% of the assets that its associated firms had sent to Modulo in 2022.
The court documents reveal that Alameda Research, acting on behalf of FTX founder Sam Bankman-Fried, sent Modulo a total of $475 million starting in May 2022, when FTX was in dire financial straits.
Alameda also paid $25 million to acquire a stake in Modulo and contributed $450 million to an investment fund managed by the hedge fund. As part of the settlement agreement, FTX and Alameda will surrender ownership of Modulo, and FTX has agreed not to pursue any further legal action against Modulo or its executives.
The interim managers appointed to oversee FTX’s bankruptcy proceedings have so far been able to locate only $2.7 billion of the $11.6 billion that was supposed to be held in client accounts.
Some of the missing funds have been attributed to Alameda Research, which allegedly borrowed $9.3 billion from customer accounts prior to the exchange’s collapse. It has also been reported that the founders and key employees of FTX received $3.2 billion in payments and loans, primarily from a subsidiary of Alameda Research.
In addition to its settlement with Modulo, FTX has filed a lawsuit against FTX Digital Markets and its Bahamian liquidators, alleging that they are wrongfully claiming the assets of the cryptocurrency exchange.