US Court approved FTX's proposal at a hearing in Wilmington, Delaware, allowing FTX to sell up to $100 million in cryptocurrency per week.
Bankrupt crypto exchange FTX received US court permission on Wednesday to liquidate cryptocurrency assets, a move the company said would allow it to repay customers in US dollars and minimize risks related to price volatility in crypto markets. US Bankruptcy Judge John Dorsey approved FTX's proposal at a court hearing in Wilmington, Delaware, allowing FTX to sell up to $100 million in cryptocurrency per week and enter into hedging and staking agreements that will allow FTX to minimize the risk of price volatility and earn passive income on more mainstream crypto assets like bitcoin and ether.
FTX's request was supported by the official committee
appointed to represent its customers in the bankruptcy, and by an ad hoc
committee that represents non-US customers with deposits on FTX.com's
international exchange. During the hearing, Dorsey overruled concerns raised by
two FTX customers who said FTX sales could cause crypto prices to crash and
that FTX may not own all of the crypto that it holds in its accounts.
FTX said in court filings it was keenly aware of the risk
that its effort to liquidate coins could move crypto markets. It said it had
hired US crypto firm Galaxy as an investment advisor in part to manage the risk
that "information leakage" would lead to short-selling activity and
sharp declines in the price of crypto. But keeping its current crypto portfolio
intact also carries risks, potentially locking FTX into holding certain assets
as their prices decline, according to FTX's court papers.
Dorsey allowed FTX to increase its liquidation pace to up to
$200 million per week, if both creditors committees agree.
FTX said in a Monday court filing it owns $3.4 billion in
cryptocurrencies, including $1.16 billion in Solana, $560 million in Bitcoin,
and $192 million in Ether.
FTX filed for bankruptcy in November 2022 in the wake of
claims that it misused and lost billions of dollars worth of customers' crypto
deposits. FTX has recovered more than $7 billion in assets to repay customers,
and it is pursuing additional recoveries through lawsuits against FTX insiders
and other defendants who received money from FTX before it went bankrupt.
FTX founder Sam Bankman-Fried has pleaded not guilty to
charges that he defrauded FTX customers by using their funds to prop up his own
risky investments. Other former FTX executives have pleaded guilty to criminal
charges.
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