Authorized Liquidation: FTX Bankruptcy Sale of Crypto Assets, BTC and SOL Included

Police & Regulations
Sep 14, 2023 at 12:36 pm

FTX's legal team has submitted a formal plea to the U.S. Bankruptcy Court in Delaware, requesting authorization to liquidate, invest, and secure its cryptocurrency assets for the purpose of repaying its creditors.

In a recent development, a judge presiding over the U.S. Bankruptcy Court for the District of Delaware has given the green light for the crypto exchange, FTX, to proceed with the sale and investment of its digital assets as part of the creditor reimbursement process. During the court session, Judge John Dorsey not only supported this motion but also dismissed two opposing objections, thereby granting the financially troubled exchange the authority to move forward with the liquidation, investment, and risk management of its cryptocurrency holdings, estimated to be valued at over $3.4 billion.

A spokesperson representing the ad hoc committee of FTX customers expressed their endorsement for the proposal, while a legal representative for the unsecured creditors committee underscored the collective interest in expediting the proceedings. "The sooner we can kickstart this process, the better," they emphasized.

FTX initially sought permission to engage in these activities back in August, asserting that leveraging their cryptocurrency assets would "enable the Debtors [FTX] to mitigate potential downside risk before the sale of such bitcoin or ether," and further contended that "staking specific digital assets... will benefit the estates - and, ultimately, creditors - by generating low-risk returns on their otherwise dormant digital assets," as outlined in the legal filing by FTX.

The judge raised questions regarding FTX's capability to discern the depositors of the assets. A legal representative representing the exchange clarified, "[FTX's] stance is that the digital assets we're selling belong to the debtors." Another legal counsel clarified that the assets are aggregated into a unified pool and are "not traceable to the individual customer."

Furthermore, the exchange sought approval to enlist Mike Novogratz from Galaxy Digital as an advisor.

FTX divulged earlier this week that it retains approximately $1.16 billion worth of Solana (SOL), representing roughly 16% of the token's overall supply. Additionally, it holds approximately $560 million in Bitcoin (BTC), while the rest of its holdings consist of lesser-known, less liquid tokens.

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