The Trustee insisted that FTX must publicly announce any intention to sell off its substantial assets.
FTX liquidation plan will involve the sale of certain digital assets owned by the defunct crypto exchange. The liquidation would involve sale of up to $100M worth of crypto assets per week.
FTX aims to settle debts
FTX, the once-leading crypto exchange that crashed in November 2022, appeared in Delaware Bankruptcy Court today to request the approval for $3.4B in Bitcoin and other cryptocurrencies.
The failed business initial announcement to offload its holdings without notice was objected to by the US Trustee, the bankruptcy department of the Department of Justice. The Trustee insisted that FTX must publicly announce any intention to sell off its substantial assets.
This pushback comes as a result of potential market disruption that could occur due to significant amounts that may enter the market as a result of the liquidation process.
According to the revealed estimates , FTX’s cryptocurrency holdings amount to $1.16B in locked Solana tokens, $529M in FTT, $560M in BTC, $90M in Ethereum, and $42M in Dogecoin, among others.
In addition to the $1.1B in cash it had as of November 11 and the $1.5B it now has secured, the company also reportedly possesses $3.4B in cryptocurrency as of August 31. Additionally, there are approximately 1,300 lesser-known tokens worth hundreds of millions of dollars each that may be less liquid.
Read more: Former FTX executive pleads guilty less than a month before founder’s trial
Proposal amended
The exchange’s liquidator amended its liquidation proposal in Tuesday filing, with the aim to assuage the concerns of the US Trustee.
The updated proposal lays out a clear procedure for liquidators to sell off some of FTX’s crypto holdings. The application states that restrictions on sales of digital assets like Bitcoin and Ethereum would start at $50M per week and increase to $100M per week after that.
Additionally, the order permits FTX to make post-petition hedging agreements. These might moreover offer financial security from the dangers connected with a sizable asset liquidation.
Therefore, it appears that FTX’s last-minute adjustment to its liquidation strategy was a strategic choice. It probably aims to lessen any market-moving effects that could result from a sizable asset liquidation.
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