The controversial digital asset exchange FTX, captured headlines last year after its sudden collapse. Today, in an unfolding saga, the exchange has received the go-ahead from the U.S. Bankruptcy Court for the District of Delaware to offload its massive cryptocurrency holdings worth $3.4 billion.
The exchange’s fall from grace due to alleged criminal mismanagement was swift and unexpected. Once a significant backer of Solana, FTX filed for Chapter 11 bankruptcy in November 2022. The overall downfall has been lined with scandalous charges, misdistributed funds, and a criminal trial pending for Sam Bankman-Fried, FTX’s ex-CEO and cofounder.
Judge John Dorsey has now handed collapsing FTX a lifeline in the form of an approval to sell its cryptocurrency holdings. First hinted at in August 2022, this move is a critical part of their recovery plan which was formulated to monetize these assets for the benefit of global stakeholders.
The assets in question include approximately $1.16 billion in Solana (SOL), $560 million in Bitcoin (BTC), $192 million in Ethereum (ETH) and $137 million in Aptos (APT). The cap for these sales has been set to $100 million worth of tokens per week, with permission to increase this limit to $200 million per week granted if FTX can provide written court authorization. Judge Dorsey’s decision also made clear that certain types of transactions are exempt from this selling limit computation.
In a move welcomed by affected customers and creditors alike, FTX will utilize the funds raised from these sales to pay back those who saw their deposits vanish amidst their bankruptcy. Filing at a financial hole of $7 billion, it is hoped the $3.4 billion these sales could garner would signficantly aid in repairing their economic damage.
Appointed to oversee these sales as the investment manager is Mike Novogratz’s Galaxy Digital. Its role would be to minimize the risks related to the price volatility in the crypto market and ensure that asset liquidation does not cause a sudden dip in crypto prices or induce adverse activity such as short-selling.
Amidst swirling allegations, there were questions raised on whether FTX is the real owner of all the crypto assets it claims to hold. This concern was overruled in the court though, and now the collapsed exchange is poised to march into its next phase of recovery.
Despite FTX’s ongoing efforts to rectify the situation, the fallout from this ordeal still resonates, and Bankman-Fried’s impending trial in October remains indicative of the steep price of failed business governance in this high-risk, high-reward industry.
