A federal court ruled on Wednesday that bankrupt crypto firm FTX can sell its crypto assets worth over $7 billion to facilitate creditors’ repayment. The judge presiding over the case in the US Bankruptcy Court for the District of Delaware, John Dorsey, passed the judgment, overruling two motions against the asset sales.
The ad hoc committee representing FTX customers supported the ruling, with the unsecured creditors committee also giving the process a nod. FTX filed for the plan to start reimbursing its creditors in August, stating that it intends to see the process overseen by a financial adviser.
Asset Sales Plan
As part of FTX’s plan to restart, refunding creditors is an integral part of the process. With its approval, the bankrupt US-based crypto exchange would start liquidating its debtor’s assets to make creditors whole.
According to the filing by FTX, it would liquidate a maximum of $100 million per week, although there is room to double the value on a token-to-token basis. The estate is also mandated to give the US Trustee’s office a 10-day notice when selling cryptocurrencies like Bitcoin and Ether.
FTX would hedge its crypto assets to reduce the impact of price movements on the funds realized from the asset sales. Hedging would limit potential downside risks prior to the sale of cryptocurrencies, the exchange’s August filing stated. The bankrupt crypto firm noted that it would also maintain the rights to stake a particular portion of the assets to yield more funds for creditors.
Deposits Not Traceable
When the judge raised issues about the traceability of the depositors, FTX representatives noted that it could not be ascertained.
“It’s all part of one pool. There are assets that are associated with the exchange, we call the dot com customer pool and the US pool, but they don’t necessarily match customer entitlements,” an FTX representative stated.
FTX has asked to hire Galaxy Digital’s Mike Novogratz as a financial adviser on the asset sales and creditor refund proceeding.
