A Delaware District Judge Approves Order Allowing FTX to Sell Cryptocurrency to Creditors
A Delaware district judge approved an order allowing bankrupt crypto exchange FTX to sell off billions of its cryptocurrency to be distributed to creditors.
Debtors’ Proposed Plan
- Debtors filed a proposed plan in August, under which the estate’s token sales would be guided by a financial advisor.
- The estate would only be permitted to sell $100 million per week of most tokens, though that limit could be permanently raised to $200 million on a token-by-token basis.
Judge John Dorsey approved the plan during a hearing on Wednesday.
- When selling bitcoin, ether, and other tokens, the estate would be required to give the U.S. Trustee’s office 10 days’ notice.
- FTX wants to hedge bitcoin and ether to minimize the impact of price movement on the proceeds from the sale.
- The estate reserves the right to stake certain tokens, provided that the returns from token staking programs would help return more funds to the creditors.
A lawyer representing the ad hoc committee for FTX customers said they were supportive of the motion “as a way to preserve and maximize value for the debtors’ estates.”
The judge then asked about the traceability of crypto for those who deposited with FTX.
A lawyer representing FTX said there was no way to trace individual crypto to individual customers.
FTX filed for bankruptcy protection in November and holds $3.4 billion in crypto holdings.
Jitters about the possible sales have pushed some alt coins to trend lower over recent days.
Bitcoin’s price was up on Wednesday, rising 0.7% over the past 24 hours to $26,180 at 1:46 p.m. ET, according to CoinGecko.
Updated to include additional details
Disclaimer: The former CEO and majority shareholder of The Block has disclosed a series of loans from former FTX and Alameda founder Sam Bankman-Fried.
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