FTX's two cooperators pay nothing, and their clock began in 2022

What happened

The United States District Court for the Southern District of New York entered supplemental consent orders against Caroline Ellison, former chief executive of Alameda Research, and Zixiao Gary Wang, co-founder of Alameda and FTX, on 18 August 2026; the judge signed them on the 17th and the Commodity Futures Trading Commission announced them on the 19th. Neither is required to pay anything. Both orders record that the Commission is not seeking and the court is not imposing 'restitution, disgorgement, and/or a civil monetary penalty at this time', on three grounds: cooperation in the Commission's investigation and in the parallel criminal actions, the judgments already entered in those criminal actions, and continuing conditions. Ellison was sentenced to 24 months in prison and three years of supervised release, and both were jointly and severally liable for a forfeiture order of $11,020,000,000. What the orders do impose is time. Ellison is restrained for five years from trading on any registered entity, from transacting in commodity interests for her own account or having them traded on her behalf, from directing anybody else's trading in commodity interests or digital asset commodities, and from soliciting funds for that purpose; for ten years she may not apply for registration with the Commission or act as a principal, agent, officer or employee of any registered person. Wang's terms are the same with an eight-year registration bar rather than ten. Both periods run from the date of entry of the initial consent orders, which was 23 December 2022, not from this week. The conditions are the price. Ellison must continue to cooperate under the cooperation agreement she executed with the Division of Enforcement on 20 December 2022 and, in terms, must 'prepare and appear for testimony, as requested by the Division's staff, in the CFTC's continuing litigation against Samuel Bankman-Fried'. If the Commission later obtains information that either defendant knowingly gave it materially false or misleading material, or broke the cooperation agreement, it may move to reopen the case at its sole discretion and without prior notice and seek the money it has forgone. David I. Miller, the Commission's director of enforcement, said the resolution 'further underscores the high value this Division places on robust cooperation' and that the sanctions 'reflect their material assistance in the Commission's FTX-related investigations'. The Commission's original complaint of 13 December 2022 put the loss at more than $8bn of FTX customer deposits.

Why it matters

The largest customer loss on this beat has now produced, from the derivatives regulator, a bill of nothing. That is a defensible bargain and it should be read as one: the agency's currency here was never money, since an $11.02bn forfeiture already sits against both defendants in the criminal court, and what it bought with the waiver was evidence in a case it has not finished. But the arithmetic of the bans deserves stating plainly, because the reports do not. Dating them to 23 December 2022 means Ellison's five-year trading ban expires on 23 December 2027 and has about sixteen months left to run, and her ten-year registration bar runs to December 2032; Wang's trading ban ends on the same day in 2027 and his registration bar in December 2030. A headline announcing a five-year trading ban in August 2026 is describing a restriction that is already three years and eight months old. The reach of the ban is narrower than the phrase suggests, and the text is careful about it. The prohibitions on trading on a registered entity and on transacting in commodity interests for one's own account cover futures, options and swaps. Digital asset commodities appear only in the two subparagraphs that deal with directing another person's trading and with soliciting or accepting funds from anybody for the purpose of buying or selling. On the face of the orders, neither defendant is barred from trading spot digital asset commodities for their own account; what they may not do is run somebody else's money. And the resolution is conditional in a way that costs the Commission nothing to keep. If it moves to reopen, the defendants may contest only whether they lied or broke the agreement. They are precluded from arguing that they did not violate the law, the allegations of the complaint and the findings of the initial consent order are deemed true for the purpose of that motion, and the court may decide it on affidavits and investigative testimony 'without regard to the standards for summary judgment contained in Rule 56(c)'. The Commission has bought continuing testimony with a waiver it can withdraw on a lower evidentiary standard than it would normally face.

What is not settled

The case the whole arrangement serves is unresolved. The orders refer to 'the CFTC's continuing litigation against Samuel Bankman-Fried' in the same docket, and neither the release nor the orders say when it will be tried or what the Commission will ask for. Whether 'at this time' ever becomes never is therefore not settled: the waiver is expressly conditional, and the condition is a cooperation obligation with no stated end date. Nothing here speaks to the $11.02bn. The forfeiture is a criminal judgment for which the two are jointly and severally liable with others, and the Commission's release records it as a reason not to pursue restitution rather than as a route by which customers are made whole; how much of it has been collected, and where it goes, is outside both documents. Nor do the orders address FTX Trading Ltd or Alameda Research LLC, the two corporate defendants, whose position in the same action the release does not mention. The reports disagree on the one fact that changes the meaning of the announcement. Investment Executive states that the restrictions 'run from December 2022, when initial consent orders were entered against them'. Protos writes that the pair 'must also refrain from registering with the commission for 10 and eight more years, respectively', which the orders do not say and which would put the registration bars into 2036 and 2034. The primary settles it against Protos: both orders read 'from the date of entry of the Initial Consent Order'.