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FTX Receives Court Clearance To Sell Cryptocurrency Assets
On Wednesday, bankrupt crypto exchange FTX got authorization from a US court to sell bitcoin assets, which the business said would allow it to reimburse customers in US dollars and reduce risks associated with price volatility in crypto markets.
At a court hearing in Wilmington, Delaware, U.S. Bankruptcy Judge John Dorsey approved FTX's proposal, allowing FTX to sell up to $100 million in cryptocurrency per week and enter into hedging and staking agreements that will allow FTX to minimise the risk of price volatility and earn passive income on more mainstream crypto assets like bitcoin and ether.
The official committee established to represent its clients in the bankruptcy, as well as an ad hoc committee representing non-U.S. consumers having deposits on FTX.com's foreign exchange, approved FTX's proposal.
Dorsey dismissed concerns voiced by two FTX customers during the hearing, who claimed that FTX sales might cause crypto values to plummet and that FTX may not possess all of the coin in its accounts.
In court filings, FTX stated that it was acutely aware of the possibility that its efforts to dispose tokens might disrupt crypto markets. It said it recruited the U.S. crypto firm Galaxy as an investment advisor in part to control the risk of "information leakage," which may lead to short-selling and significant drops in the price of cryptocurrency. However, according to FTX's court papers, maintaining its current crypto portfolio intact carries dangers, potentially tying FTX into owning particular assets as their prices decrease.
Dorsey agreed to let FTX to accelerate its liquidation to up to $200 million per week if both creditors committees agreed.
In a court filing on Monday, FTX stated that it holds $3.4 billion in cryptocurrencies, including $1.16 billion in Solana, $560 million in bitcoin, and $192 million in ether.
FTX declared bankruptcy in November 2022, following allegations that it misappropriated and lost billions of dollars in customer crypto deposits. FTX has recovered more than $7 billion in assets in order to reimburse consumers, and it is pursuing additional recovery through lawsuits against FTX insiders and other defendants who received money from FTX before company declared bankruptcy.
Sam Bankman-Fried, the founder of FTX, has pleaded not guilty to charges that he deceived FTX customers by using their funds to support his own dangerous investments. Other former FTX officials have entered pleas of guilty to criminal charges.
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