In a significant development, the U.S. Bankruptcy Court for the District of Delaware has granted the crypto exchange, FTX permission to sell, invest, and hedge its crypto holdings, valued at over $3.4 billion, to settle outstanding debt.
This ruling comes after FTX's legal team filed a request for authorization to engage in the sale of the digital assets, citing the benefits of hedging crypto assets and generating returns from staking certain digital assets for the creditors.
Judge John Dorsey presided over the court hearing where he not only approved the motion but also overruled objections raised by two parties opposing the plan. This pivotal decision allows FTX to initiate the process of selling, staking, and hedging its substantial crypto holdings.
Breaking news, @FTX_Official is finally authorized to sell its crypto reserve. pic.twitter.com/G4OKSWn3Ny
— FTXRELOADED (@FTXRELOADED) September 11, 2023
FTX Modifies Crypto Asset Sale Plan
In a bid to address concerns raised by the U.S. Trustee, thebankruptcy branch of the Department of Justice, FTX amended its proposal to sell billions of dollars in crypto assets yesterday (Tuesday). The original plan faced objections from the U.S. Trustee that argued intentions to sell Bitcoin (BTC) or Ethereum (ETH) should be widely publicized to allow others the opportunity to object.
However, under the new proposal, FTX aims to avoid issuing advance public notices of transactions, primarily due to the impact it could have on the market. The mere prospect of a major crypto player offloading up to $100 million in assets each week has already had a chilling effect on crypto prices, Coindesk reported.
To find the middle ground, FTX has agreed to keep the U.S. Trustee privately informed about its transactions, thereby addressing the concerns raised by the regulatory body. This information sharing will extend to committees representing the exchange's creditors, ensuring transparency is in the process. FTX hopes that these adjustments will be sufficient to appease its opponents, as the proposal comes under consideration by Judge John Dorsey in a Delaware courtroom.
FTX.com, its sister firm Alameda Research, and about 130 of its affiliates filed for bankruptcy last November after the misdeeds of FTX's management surfaced. Sam Bankman-Fried, the Founder and former CEO of FTX, is facing several civil and criminal charges and is now behind bars awaiting trial. Other top FTX and Alameda executives pled guilty and are cooperating with the investigators.
The charges of the bankrupt exchange were transferred to John J. Ray III who has assumed the role of FTX’s CEO following the bankruptcy filing.
A Massive Crypto Stash
FTX was one of the top crypto exchanges, which grew exponentially. The administrator of FTX first proposed to liquidate the crypto assets with $3.4 billion of them held by the bankrupt exchange last August. The proposal included a staged sell-off with a limit of $100 million worth of tokens per week, which can be increased to $200 million on an individual token basis. Mike Novogratz, the CEO of Galaxy Digital, will be appointed as the investment manager responsible for the sale.
As estimated in January 2023, FTX holds $685 million in locked Solana tokens, $529 million in FTT tokens, $268 million in Bitcoin, and $90 million in Ethereum. The bankrupt exchange also has $67 million in Aptos, $42 million in Dogecoin, $39 million in Polygon, and $29 million in XRP, along with stablecoins.
Further, FTX is holding an additional $1.2 billion in cryptocurrencies on third-party crypto exchanges. Most recently, fresh court documents revealed that $1.6 billion in Solana and $560 million in Bitcoin was held by the exchange, along with real-estate in The Bahamas valued at $200 million.
As of August 31, FTX held a total of US$3.4 billion in crypto assets, including:US$1.16 billion SOL$560 million BTC$192 million ETH$137 million APT$120 million USDT$119 million XRP$49 million BIT$46 million STG$41 million WBTC $37 million WETH. Read more… pic.twitter.com/fJ7ntAiEdk
— Wu Blockchain (@WuBlockchain) September 11, 2023
Meanwhile, the administrators of FTX are evaluating the legality of recouping the endorsement fees paid to several top athletes and sports clubs. The exchange paid $750,000 to the former basketball professional Shaquille O’Neal, more than $300,000 and $270,000 to the Tennis player Naomi Osaka and the former baseball star David Ortiz, respectively, as well as a payment of over $200,000 to the American football quarterback Trevor Lawrence. It further paid about $420,000 to the professional basketball team, the Golden State Warriors, and over $250,000 to Miami Heat.
This article was written by Arnab Shome at www.financemagnates.com.
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