FTX Approved to Liquidate Crypto Assets
Today, the embattled digital asset exchange FTX has received approval from Judge John Dorsey overseeing its bankruptcy proceedings to proceed with the sale of billions of dollars in crypto assets.
The assets earmarked for sale include Solana, Ethereum, Bitcoin, and others, amounting to $3.4 billion, with approval granted in the U.S. Bankruptcy Court for the District of Delaware.
The plan for divesting these assets, initially outlined in August, involves appointing Galaxy Digital, led by Mike Novogratz, as the investment manager responsible for overseeing the sale.
FTX aims to restrict its weekly sales to $100 million worth of tokens, with the possibility of increasing this limit to $200 million for individual tokens, subject to court approval.
Judge Dorsey has left open the option for FTX to raise its weekly maximum limit with written authorization from the court. However, it’s important to note that sales of Bitcoin, Ethereum, stablecoins, and the redemption of stablecoins will not be counted towards the $100 million weekly limit, as stated in a footnote on the order.
Bitcoin, Ether, and tokens associated with insiders may be liquidated via a separate resolution by FTX following a notice period of 10 days to both the committees and the U.S. trustee, designated by the United States Department of Justice.
These sales will also be managed by an investment advisor. Details regarding these transactions will be strictly confidential, accessible only to professionals, with a redacted version available to the public. Any objections raised by the committees and the U.S. trustee will be considered, and in such an event, the sales will be postponed until the objections are resolved or until the court mandates the sale.
Additionally, transactions involving the bridging of tokens from non-native blockchains back to their native networks will also be excluded from the limit.
FTX’s unexpected bankruptcy last November was attributed to alleged criminal mismanagement.
Billions of dollars in customer funds disappeared, and the exchange’s recently appointed leadership is currently focused on repaying its creditors. Liquidating these assets will serve as a means to address the financial gap, initially estimated at $7 billion.
According to a court filing made on Monday, FTX possesses assets valued at $1.16 billion in Solana (SOL), $560 million in Bitcoin (BTC), $192 million in Ethereum (ETH), and $137 million in Aptos (APT). It’s important to note that the cryptocurrency valuations provided in the court document are based on prices as of August 31.
To date, approximately $800 million in cash and publicly traded equity has already been reclaimed.
With the impending sale of these assets, if you hold them, is it reason to worry? Probably not.
As mentioned above, they can only be sold in increments.
Even for the larger holdings, such as SOL, these are locked from 2025-2028, with the release of coins occurring over that time, and most likely sold to OTC, in which someone would be purchasing FTX’s vesting contract.
Largely FUD, of course, just as anything attached to crypto is at the moment!
Sometimes the FUD around is worse than the actual event itself.
