Bankrupt FTX Unveils $100 Million Weekly Crypto Liquidation Plan in Court Filing

The revised order provides a structured process for investment advisors to oversee the liquidation of portions of FTX's cryptocurrency holdings. Initially, weekly sales of assets like Bitcoin and Ethereum are capped at $50 million, with plans to increase this limit to $100 million in subsequent weeks. However, stricter controls are proposed for digital tokens affiliated with insiders. To ensure transparency, the exchange must give creditors and the U.S. Trustee a 10-day notice before selling such assets, and objections could potentially halt these transactions.

FTX also seeks approval to engage in cryptocurrency hedging contracts under the supervision of an approved investment advisor. Currently, this hedging is limited to Bitcoin and Ethereum, with any expansion requiring creditor approval. To maintain transparency, FTX must provide detailed biweekly and monthly reports on asset transactions, balances, staking yields, and market insights. Additionally, regular status calls between FTX, advisors, and creditors are planned to enhance transparency in the process.

The collapse of Sam Bankman-Fried's crypto empire in November 2022, triggered by a liquidity crisis following $6 billion in withdrawals within a week, led to FTX's bankruptcy filing. Despite these challenges, FTX's new leadership has ambitious plans to boost revenue through algorithmic trading. The company currently holds more than $1.2 billion in cash reserves. The bankruptcy court will review the proposed guidelines for digital asset sales, ultimately determining whether they should be approved.

This recent court filing follows a September 11th report that shed light on FTX's extensive asset portfolio, including various cryptocurrencies, real estate, and securities. Notable holdings include over $3.4 billion in digital assets, with dominant positions in Solana valued at $1.16 billion and Bitcoin valued at $560 million. Additionally, FTX has substantial venture investments totaling approximately $4.5 billion, including partnerships with major crypto firms like Kraken and SkyBridge. The company also possesses $200 million in luxury Bahamas real estate and $529 million in securities, largely through Grayscale's crypto products. In total, Sam Bankman-Fried's empire boasts an estimated $7 billion in assets.

Liquidating a portion of these assets in line with the proposed guidelines offers a lifeline to FTX as it navigates the complexities of its restructuring process. Mediation efforts are ongoing among the various creditors and stakeholders involved. The bankruptcy court's decision regarding the asset sale plan will play a crucial role in determining the future of this once-thriving cryptocurrency exchange.