Image Credits: CNN
- FTX, a digital asset exchange that collapsed in November, has been approved by Judge John Dorsey to sell around $3.4 billion worth of crypto assets, including Solana, Ethereum, and Bitcoin.
- FTX will initially limit its weekly token sales to $100 million, but can increase to $200 million with court authorization.
- The sale of these assets will help repay creditors and address the original $7 billion deficit.
In a significant development, FTX, the once-thriving digital asset exchange that recently collapsed, has received the green light from Judge John Dorsey, who is overseeing its bankruptcy proceedings. This approval came from the U.S. Bankruptcy Court for the District of Delaware, allowing FTX to sell a substantial amount of crypto assets valued at around $3.4 billion. These assets include Solana, Ethereum, Bitcoin, and more.
FTX’s plan for liquidating these assets, which was first outlined in August, involves enlisting the help of Galaxy Digital, led by Mike Novogratz, as the investment manager responsible for supervising the sale process. As part of this plan, FTX will initially limit its weekly token sales to $100 million, but they have the option to increase this limit to $200 million for individual tokens with written authorization from the court. It’s important to note that sales of Bitcoin, Ethereum, stablecoins, and stablecoin redemptions will not count towards the $100 million weekly limit. Moreover, transactions related to bridging tokens from non-native blockchains back to their native networks will be excluded from this limit as well.
FTX’s unexpected bankruptcy in November was attributed to alleged criminal mismanagement, which resulted in the disappearance of billions of dollars in customer funds. The exchange’s new management is now focused on repaying creditors, and the sale of these assets will play a crucial role in addressing the original estimated $7 billion deficit.
Recent court filings have disclosed that FTX holds assets amounting to $1.16 billion in Solana (SOL), $560 million in Bitcoin (BTC), $192 million in Ethereum (ETH), and $137 million in Aptos (APT), based on cryptocurrency prices as of August 31. It’s worth noting that approximately $800 million in cash and public equity has already been recovered.
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Sam Bankman-Fried, the former CEO and co-founder of FTX, is currently awaiting a significant criminal trial scheduled for October in the aftermath of the exchange’s collapse. He faces 13 criminal charges, including wire fraud, securities fraud, conspiracy to commit bank fraud, and defrauding the Federal Election Commission.
This development raises two critical questions. Firstly, FTX is involved in a lawsuit against Layerzero Labs, a blockchain company, in an attempt to recover a $45 million deal and over $40 million in withdrawals made in the final days before FTX filed for bankruptcy. This situation raises concerns about how assets were handled during such tumultuous times.
Secondly, the method and responsibility with which FTX will sell these assets are of immense significance. Will FTX choose a cautious approach, conducting over-the-counter (OTC) transactions, or will they resort to rapid asset dumping on exchanges, The decisions made in this regard will undoubtedly have a significant impact on cryptocurrency markets, particularly affecting the fate of Solana, given FTX’s substantial holdings in the cryptocurrency.
The crypto community will closely monitor these complex financial recovery proceedings, with potential repercussions extending well beyond the scope of this specific case.
