In a recent legal filing, the insolvent cryptocurrency exchange FTX has adjusted its proposed protocol for liquidating its substantial cryptocurrency assets in response to concerns raised by the U.S. Trustee.
In light of objections raised by the U.S. Trustee in their prior submissions, FTX has made substantial alterations to its proposed procedure for handling creditor claims.
The original blueprint, which entailed the liquidation of cryptocurrency assets valued at $3.4 billion, is scheduled for examination in the Delaware Bankruptcy Court on September 13th. FTX has made eleventh-hour modifications to its asset liquidation strategy, bypassing the need for a public notice.
This decision underscores FTX’s apprehensions regarding potential market repercussions, as they are concerned about triggering a widespread sell-off. Their revised proposal eliminates the requirement for advance public notice, emphasizing the potential impact on market prices.
Initially, the U.S. Trustee contended that significant asset sales, such as Bitcoin or Ether, should be widely publicized to allow for objections.
FTX countered that the mere prospect of a cryptocurrency entity offloading up to $100 million in assets weekly has already had an impact on market sentiment, and providing public notice would exacerbate price instability.
According to the outlined plan, the estate will have the authorization to liquidate cryptocurrency tokens, with a weekly limit of up to $100 million for most tokens. In specific cases, this limit may be adjusted to $200 million. This significant development is poised to pave the way for one of the largest cryptocurrency asset liquidations in history.
Expressing their dissatisfaction with the U.S. Trustee’s participation in what they considered a routine settlement procedure, the debtors have now formally included the U.S. Trustee as a notified party in the proceedings.
However, it’s important to note that the proposal still awaits approval from the Delaware Bankruptcy Court.
Furthermore, FTX has made a commitment to regularly submit monthly reports that provide a detailed account of executed settlements. This commitment is aimed at promoting transparency and enhancing oversight throughout the process.
Any objections raised by the “notified parties” will need to be addressed and resolved through a court order before the claims process can move forward.
Delaware Judge Approves FTX’s Request to Liquidate $3.4 Billion in Digital Assets
In a significant development earlier today, Delaware district judge John Dorsey granted FTX the green light to commence the liquidation of its digital assets, amounting to an estimated $3.4 billion. This milestone represents a pivotal stride in FTX’s endeavors to manage its liabilities within the framework of the ongoing bankruptcy proceedings.
During the court hearing, Judge Dorsey gave his approval to the motion and dismissed two objections, effectively clearing the path for FTX to proceed with the sale, staking, and hedging of its cryptocurrency holdings.
FTX’s total assets are valued at approximately $7 billion, which includes $1.16 billion in Solana (SOL) tokens, $560 million in Bitcoin (BTC), and $119 million in XRP.
In August, FTX submitted a proposed plan outlining its strategy for divesting its cryptocurrency holdings under the guidance of a financial advisor.
Furthermore, Galaxy Digital, led by Mike Novogratz, has been appointed as the investment manager responsible for overseeing the sale of these assets.
This arrangement allows FTX to methodically offload its tokens while adhering to the established weekly limit, which may be subject to adjustments for specific tokens as necessary.
The decision to approve this liquidation plan garnered support from various parties involved, including an attorney representing the ad hoc committee of FTX customers, all aiming to expedite the repayment process for creditors.
