A U.S. bankruptcy court in Delaware approved failed cryptocurrency exchange FTX’s motion to sell its crypto assets at a court hearing on Wednesday. The company, led by restructuring expert John J. Ray III, is looking to repay its creditors while considering a possible revamp of the trading platform.
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- Delaware bankruptcy court Judge John Dorsey allowed the bankrupt exchange to liquidate up to US$100 million in cryptocurrencies per week, according to court documents. The limit may rise to US$200 million upon approval from two committees representing FTX customers.
- FTX also plans to hedge and stake its crypto through an investment advisor. The company expects these methods to mitigate price volatility risks and earn passive interest, according to the approved proposal.
- The company has nominated Galaxy Asset Management — a digital asset company led by ex-investment banker Mike Novogratz — to act as an advisor in the process.
- The bankrupt crypto exchange owns US$3.4 billion in crypto assets, according to its court filing. It holds about US$1.16 billion in Solana, US$560 million in Bitcoin and US$192 million in Ether. Other crypto holdings include stablecoin USDT and XRP.
- FTX and sister hedge fund Alameda Research filed for Chapter 11 bankruptcy protection on Nov. 11, which was followed by allegations of misappropriation of billions of dollars in client funds and other wrongdoings.
- FTX is also trying to claw back millions of dollars it paid celebrity endorsers and sports teams prior to its bankruptcy, including retired basketball player Shaquille O’Neal, tennis professional Naomi Osaka, and the National Basketball Association team Miami Heat.
- Meanwhile, Sam Bankman-Fried, FTX founder and its former chief executive officer, was jailed Aug. 11 for witness tampering, following his arrest in the Bahamas in December 2022. He maintains his innocence and has pleaded not guilty to all 13 charges brought against him including multibillion-dollar wire and securities fraud.
See related article: Bankrupt FTX recovers US$7.3 billion in assets, considers resurrection of operations