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 clients 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 …
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 clients 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 minimize the risk of price volatility and earn passive income on more mainstream crypto assets like bitcoin and ether.
The formal 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 documents, FTX stated that it was acutely aware of the possibility that its efforts to dispose tokens might disrupt crypto markets. It claimed it recruited the U.S. crypto business 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 documents, maintaining its present crypto portfolio intact entails 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 company misappropriated and lost billions of dollars in client crypto deposits. FTX has recovered more than $7 billion in assets in order to reimburse consumers, and it is seeking additional recovery through litigation 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 accusations that he deceived FTX clients by using their cash to support his own dangerous investments. Other former FTX officials have entered pleas of guilty to criminal charges.
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