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- 1 Bankrupt crypto exchange FTX is allowed to sell Bitcoin, Ethereum, and other crypto holdings.
- 2 FTX now has the approval to sell crypto worth $100 Million every week.
The bankruptcy cryptocurrency exchange firm FTX reportedly allowed it to offload its crypto assets for liquidation and raise funds. The U.S. Bankruptcy Court allowed the crypto firm’s request to pay back the investors and customers. At the time of writing, the beleaguered crypto firm holds about $3.4 Billion worth of assets in reserve.
Reuters reported that Judge John Dorsey at the United States Bankruptcy Court in Wilmington, Delaware approved the proposal and allowed FTX to sell crypto worth $100 Million every week. In addition to sales, the company can also hedge the assets so that the risk of price volatility can be mitigated. It is also allowed to stake the assets which will enable passive income for the bankrupt firm.
FTX’s $3.4 Billion worth of crypto portfolio holds $1.16 Billion in Solana (SOL), while Bitcoin (BTC) accounts for $560 Million and $192 Million in Ethereum (ETH).
In the request, FTX cited that they will repay their customers in the USD accumulated through the sale of crypto assets. The continued activities in the crypto markets also make the crypto assets in reserve prone to price volatility and risk of declining value.
The two committees were formed following the FTX fiasco: one was to represent company customers in bankruptcy and the other one was an ad hoc committee for representation of non-U.S. customers who withhold their deposits with international exchange of FTX. Both of them have supported the company’s request.
FTX Ensures Liquidation Will Not Cause Trouble
Two customers were said to have concerns regarding the decision to allow crypto assets sale. They raised concerns about abrupt liquidation following offloading of FTX’s assets in the open market. The court overruled citing the crypto firm’s assurance of controlled liquidation.
In the court filing, FTX admitted that it was aware of the risks involved in liquidating cryptocurrencies in the market which may have a notable impact. To deal with the issue, the company hired prominent cryptocurrency firm Galaxy Digital. It assured that the employed investment advisor will help in managing the risks involved in the process.
The company noted the “information leakage” as one of concern that could result in short selling, eventually leading to cryptocurrency prices seeing declines.
Judge Dorsey allowed the company sale at the liquidation pace of $100 Million per week initially which it can increase to $200 Million per week.
Bahamian cryptocurrency exchange founded by Sam-Bankman Fried, FTX, was once the leading crypto firm in the industry. It filed for bankruptcy in November last year after it was caught misusing the cryptocurrency deposits of users and even losing billions of dollars. At the time of its fall, the company’s valuation stood at $32 Billion.
In the coming months, FTX managed to recover over $7 Billion in assets intending to repay their customers. Also, it continued to recover by filing lawsuits against company insiders and those who took funds from the company before the bankruptcy.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
