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Global Business Of FTX Will Be Sold Or Restructured, CEO Claims

Global Business Of FTX Will Be Sold Or Restructured, CEO Claims
Even as Bahamian regulators and FTX argue in court filings and press releases about whether the bankruptcy filing should take place in New York or Delaware, the bankrupt cryptocurrency exchange said on Saturday that it is looking to sell or restructure its vast global empire.
“Based on our review over the past week, we are pleased to learn that many regulated or licensed subsidiaries of FTX, within and outside of the United States, have solvent balance sheets, responsible management and valuable franchises,” FTX chief John Ray, said in a statement.
Sam Bankman-Fried, the founder of FTX, was succeeded by Ray, who stated that it is "a priority" in the coming weeks to "explore sales, recapitalizations, or other strategic transactions with respect to these subsidiaries, and others that we identify as our work continues." FTX filed for Chapter 11 bankruptcy protection on November 11.
A flurry of Saturday morning filings in Delaware bankruptcy court preceded Ray's statement. In those filings, FTX requested authorization to pay third parties, combine bank accounts, and open new ones.
It's unclear when a potential sale would occur. In addition to stating that it "does not intend to disclose further developments unless and until it determines that further disclosure is appropriate or necessary," FTX stated that it has not established a specific deadline for the completion of this process.
In two different U.S. courts, the FTX and Bahamas securities regulators are both requesting authority over the bankruptcy procedure. Last week, Bahamian regulators transferred hundreds of millions of dollars' worth of "digital assets" from FTX's care into their own, admitting the act in a press release after being accused of doing so by FTX lawyers in an urgent court filing.
Ray singled out a few of the more robust divisions of the business. LedgerX, a derivatives platform governed by the Commodity Futures Trading Commission, is one instance. One of the few FTX-related businesses that is still operating today and not included in its bankruptcy proceedings is LedgerX. Traders can purchase futures, swaps, and options on bitcoin and ethereum through the platform, which FTX acquired in 2021.
The new CEO of FTX requested "patience" from their team members, suppliers, clients, regulators, and other government stakeholders.
There may be more than a million creditors in these Chapter 11 cases, according to FTX's filing.
216 bank accounts with positive balances from 36 different banks were found by FTX and its accountants.
A total of $564 million in cash was held by all entities, $265.6 million of which was in LedgerX's possession on a restricted basis.
Additionally, FTX lawyers want to use a "cash pooling system," which would combine all of the cash assets of each disjointed FTX entity into a single consolidated balance statement and new bank accounts that FTX is currently opening.
It's noteworthy that FTX lawyers stated they were "working, and will continue to work, closely with [existing FTX banks] to ensure that prior authorized signatories do not have access" to any prior FTX accounts that will still be in use. Sam Bankman-Fried appeared to have had virtually total control over money management and account access, according to prior reporting and court documents.
The financial records of FTX show the empire's dominance over cryptoassets on a global scale. Numerous international currencies were held by institutions in Cyprus, Dubai, Japan, and Germany. More than a dozen accounts at Signature Bank, an American company that aggressively entered the cryptocurrency customer service market in 2021, were held by FTX subsidiaries. Major American banks are absent from the list, with the exception of one Bank of America account for Blockfolio. FTX purchased Blockfolio in the summer of 2020.
In a different petition, FTX attorneys sought access to $9.3 million for "critical" vendor payments. The FTX motion established standards for "critical vendor" status, though no list was offered.
Customers should be pleased to learn that FTX lawyers have asked the court for permission to redact "certain confidential information" such as the names and "all associated identifying information" of FTX's clients.
“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 sell off assets or businesses.
Attorneys for FTX want the case to go forward in Delaware. Regulators in the Bahamas, on the other hand, assert that they do not acknowledge the legitimacy of those Chapter 11 proceedings and that they prefer to hold a Chapter 15 proceeding in New York.
Three Arrows Capital, a defunct hedge fund, took the Chapter 15 bankruptcy route. Three Arrows' collapse set off a chain reaction of events that eventually brought down Celsius, Voyager, and FTX.
It is unclear who the highest bidder might be, but the Chapter 11 procedure that FTX seeks would enable restructuring or the sale of the company to the highest bidder. Binance, a rival exchange, initially made an offer before withdrawing it. That turnaround widened a multibillion-dollar hole and exacerbated a liquidity crisis at FTX.
On Tuesday in Delaware, the first hearing in FTX's bankruptcy case will take place.

Christopher J. Mitchell

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