FTX Receives Court Approval to Sell Crypto Assets
Updated: Jan 8
FTX, a bankrupt cryptocurrency exchange, has been granted permission by a U.S. court to liquidate its cryptocurrency assets.
The move aims to enable the company to repay its customers in U.S. dollars and mitigate the risks associated with price volatility in the crypto markets.
U.S. Bankruptcy Judge John Dorsey approved FTX's proposal during a court hearing in Wilmington, Delaware. The approval allows FTX to sell up to $100 million worth of cryptocurrency per week and engage in hedging and staking agreements. These agreements will help FTX minimise the risk of price volatility and generate passive income from mainstream crypto assets like bitcoin and ether.
The request made by FTX was supported by the official committee representing its customers in the bankruptcy proceedings, as well as an ad hoc committee representing non-U.S. customers with deposits on FTX.com's international exchange.
During the hearing, concerns raised by two FTX customers regarding potential market crashes and the ownership of crypto assets held by FTX were overruled by Judge Dorsey. FTX acknowledged the risk of its liquidation efforts impacting crypto markets and stated that it had hired U.S. crypto firm Galaxy as an investment advisor to manage this risk.
FTX currently owns $3.4 billion in cryptocurrencies, including $1.16 billion in Solana, $560 million in bitcoin and $192 million in ether. The company filed for bankruptcy in November 2022 following allegations of misusing and losing billions of dollars worth of customers' crypto deposits.
FTX has since recovered over $7 billion in assets to repay its customers and is pursuing additional recoveries through lawsuits against FTX insiders and other defendants.
Founder Sam Bankman-Fried, who has pleaded not guilty to charges of defrauding FTX customers, is among those facing legal action. Former FTX executives have pleaded guilty to criminal charges.
FTX has received court approval to liquidate its cryptocurrency assets.
The move will allow FTX to repay customers in U.S. dollars and minimise risks associated with price volatility.
The court has granted FTX the ability to sell up to $100 million in cryptocurrency per week.