FTX’s latest CEO said on Saturday that the bankrupt crypto exchange is trying to sell or restructure its global empire, whilst Bahamian regulators and FTX squabble in court filings and press releases about whether the bankruptcy filing should proceed in Recent York or in Delaware.
“Based on our review over the past week, we’re pleased to learn that many regulated or licensed subsidiaries of FTX, inside and outdoors of the US, have solvent balance sheets, responsible management and worthwhile franchises,” FTX chief John Ray, said in an announcement.
Ray, who replaced FTX’s founder Sam Bankman-Fried when the corporate filed for Chapter 11 bankruptcy protection on Nov. 11, added that it’s “a priority” in the approaching weeks to “explore sales, recapitalizations or other strategic transactions with respect to those subsidiaries, and others that we discover as our work continues.”
Ray’s statement got here with a flurry of Saturday morning filings in Delaware bankruptcy court. In those filings, FTX asked for permission to pay outside vendors, consolidate bank accounts, and establish latest ones.
The precise timing of a possible sale is unclear. FTX indicated that it has not set a selected timetable for the completion of this process and said that it “doesn’t intend to reveal further developments unless and until it determines that further disclosure is acceptable or crucial.”
Each FTX and Bahamas securities regulators are searching for jurisdiction over the bankruptcy process in two different U.S. courts. Last week, Bahamian regulators moved potentially a whole bunch of thousands and thousands of “digital assets” from FTX custody into their very own, acknowledging the deed in a press release after FTX attorneys accused them of doing so in an emergency court filing.
Ray singled out a number of the company’s healthier subsidiaries for praise. One example was LedgerX, a Commodity Futures Trading Commission-regulated derivatives platform. LedgerX was one among the few FTX-related properties that are usually not an element of its bankruptcy proceedings and stays operational today. The platform, which FTX acquired in 2021, lets traders buy options, swaps and futures on bitcoin and ethereum.
The brand new FTX CEO asked that employees, vendors, customers, regulators and government stakeholders “be patient” with them.
FTX said in a filing that there might be a couple of million creditors in these Chapter 11 cases.
FTX and its accountants had identified 216 bank accounts, across 36 banks, with positive balances globally. Money balances across all entities totaled some $564 million, with $265.6 million of that within the custody of LedgerX on a restricted basis.
FTX attorneys also wish to employ a “money pooling system,” merging all of the money assets of every disparate FTX entity into one consolidated balance statement and in latest bank accounts, which FTX is currently within the means of opening.
Notably, FTX attorneys wrote that they were “working, and can proceed to work, closely with [existing FTX banks] to be certain that prior authorized signatories would not have access” to any prior FTX accounts that may proceed for use. Prior reporting and court filings have indicated that Sam Bankman-Fried held nearly absolute control over money management and account access.
FTX’s bank accounts reflect the worldwide influence of the crypto-asset empire. Institutions in Cyprus, Dubai, Japan and Germany held a big selection of worldwide currencies. FTX subsidiaries held greater than a dozen accounts at Signature Bank, an American institution that made an aggressive foray into servicing crypto customers in 2021. Except one Bank of America account for Blockfolio, major American banks are unaccounted for on the list. Blockfolio was acquired by FTX in the summertime of 2020.
In one other petition, FTX lawyers moved to access $9.3 million for vendor payments that FTX called “critical.” No list was provided, however the FTX motion established criteria for “critical vendor” status.
In welcome news for patrons, FTX attorneys applied to the court for permission to redact “certain confidential information,” including the names and “all associated identifying information” of FTX’s customers. “Public dissemination of [FTX’s] customer list could give […] competitors an unfair advantage to contact and poach their customers,” the filing read, potentially jeopardizing FTX’s ability to dump assets or businesses.
FTX lawyers want the proceedings to proceed in Delaware. Bahamas regulators, however, claim they don’t recognize the authority of those Chapter 11 proceedings and need to carry a Chapter 15 process in Recent York.
Chapter 15 bankruptcy is the route that the defunct hedge fund Three Arrows Capital has pursued. The implosion of Three Arrows launched a spiraling crisis that has taken down Voyager, Celsius, and ultimately FTX.
The Chapter 11 process that FTX seeks would allow for restructuring or sale of the corporate to the very best bidder, although it’s not clear who that is likely to be. Rival exchange Binance initially made a proposal before pulling it. That turnaround deepened a liquidity crisis at FTX and revealed a multibillion-dollar hole.
FTX’s first hearing in its bankruptcy court case is about for Tuesday in Delaware.
