Bankrupt FTX Reveals $100 Million Weekly Crypto Liquidation Plan
Date: 2023-09-13 Author: Karina Ziganova Categories: BLOCKCHAIN
FTX filed a revised order in bankruptcy court early on Sept. 13 explaining management's proposed sale and transfer of its large digital assets for purposes of ongoing proceedings.
The revised order outlines a structured process for investment advisers to liquidate part of FTX's cryptocurrency stash under the supervision of creditors. According to the statement, sales of assets such as Bitcoin and Ethereum will be capped at $50 million per week for the first 2 weeks. Then this figure will increase to $100 million monthly.
Controls over unidentified “insider” digital tokens should be tightened. The exchange must notify creditors and the US trustee 10 days in advance of the sale of such assets that may be blocked if an objection arises.
FTX is still seeking approval to enter into contracts that involve cryptocurrency hedging using an approved investment advisor. Eligible hedge assets are currently limited to Bitcoin and Ethereum, requiring lender approval for expansion.
The company's responsibilities include providing lenders and regulators with detailed bi-weekly as well as monthly cash flow reports on assets (revenues), balance sheets, and staking returns. With status calls between FTX, advisors and lenders, there will be an additional method of transparency.
Sam Bankman-Fried's sporadically falling crypto empire filed for bankruptcy on November 11, 2022 due to an apparent liquidity crisis after withdrawing $6 billion the day before. The proposed sales may be a critical capital contribution that will be used to repay FTX customers and creditors.
FTX's new management has plans to expand its algorithmic trading business in order to increase revenue. It says it has more than $1.2 billion in cash. From now on, the bankruptcy court will review the guidelines for the sale of digital assets and decide whether they need to be approved.
FTX assets.
Following a September 11 report detailing FTX's massive portfolio of assets across various cryptocurrencies and real estate, the revised lawsuit is being posted. According to earlier filings, FTX owns more than $3.4 billion in digital assets, including a leading position in Solana worth $1.16 billion and Bitcoin worth $560 million.
The company maintains hundreds of millions in lesser-known tokens that “do not meet liquidity thresholds,” it previously said. FTX's most impressive portfolio of venture investments is $4.5 billion and includes partnerships with such large crypto firms as Kraken, SkyBridge.
In addition, FTX owns luxury real estate in the Bahamas worth $200 million and securities totaling $529 million through Grayscale crypto products. The remains of the Sam Bankman-Fried empire are valued at $7 billion in total assets.
FTX's management believes that selling a portion of these assets in accordance with divestment guidelines could help restore its financial footing after filing for bankruptcy on Nov. 11 amid an apparent liquidity crunch. Despite this, the company still faces difficulties in restructuring after mediation between disparate creditors and stakeholders.
