FTX’s Sell-off Strategy in Bankruptcy
FTX’s Plan To Sell Off Their Assets
Cryptocurrency exchange FTX, which filed for bankruptcy in November 2022 after disgraced founder SBF’s fraudulent scheme imploded, has submitted a revised order to the bankruptcy court outlining its proposed guidelines for selling and transferring its significant digital asset holdings. The plan aims to provide a structured process for investment advisors to oversee the liquidation of portions of FTX’s cryptocurrency assets under creditor supervision.
The Proposed Guidelines
Asset Sales Limits: Sales of assets like Bitcoin and Ethereum will initially be limited to $50 million per week for the first few weeks, gradually increasing to $100 million weekly afterward.
- Stricter Controls for Insider-Affiliated Tokens: For unidentified “insider-affiliated” digital tokens, the exchange must give 10 days’ advance notice to creditors and the U.S. Trustee before selling. Such sales could be blocked if objections are raised.
- Cryptocurrency Hedging Contracts: FTX seeks permission to enter into cryptocurrency hedging contracts using an approved investment advisor. Currently limited to Bitcoin and Ethereum, any expansion of eligible hedging assets would require creditor approval.
- Reporting and Transparency: FTX must provide detailed biweekly and monthly reports to creditors and regulators, covering asset transactions, balances, staking yields, and market insights. Regular status calls will also promote transparency among FTX, advisors, and creditors.
FTX’s Portoflio
These proposed guidelines follow a September 11th report that unveiled FTX’s extensive asset portfolio, including over $3.4 billion in digital assets, with significant holdings in Solana and Bitcoin. The company also maintains substantial venture investments and owns luxury real estate and securities, amounting to an estimated $7 billion in total assets.
The liquidation of a portion of these holdings, as per the proposed guidelines, could potentially help FTX recover from its financial challenges. However, the exchange still faces a complex path to restructuring.
FTX’s proposed guidelines represent a pivotal moment in its quest to overcome financial hurdles. The potential capital infusion from these asset sales offers a ray of hope for creditors and customers seeking resolution. However, the path to recovery remains intricate, marked by ongoing negotiations among a diverse array of stakeholders.
As FTX continues to navigate Chapter 11 proceedings, the cryptocurrency industry watches with keen interest, recognizing the significance of this chapter in the ever-evolving crypto landscape. Should The Cardano Times learn more, we will let you know.
