The Delaware Bankruptcy Court has given its nod to the sale of FTX digital assets. Judge John Dorsey issued the ruling during a hearing on September 13, marking a pivotal moment in the ongoing FTX bankruptcy proceedings. Notably, crucial amendments were made to the draft order pertaining to the asset sale on the preceding day, further shaping the fate of FTX’s assets.
Under the approved arrangement, FTX is granted the authority to initiate the sale of its digital assets. However, this excludes cryptocurrencies such as Bitcoin and Ether, along with select “insider-affiliated tokens.” The sales will be carried out in weekly batches, guided by predefined guidelines, through an investment adviser.
For the initial week, there is a cap of $50 million, which subsequently increases to $100 million in the following weeks. Moreover, there’s a provision to escalate this limit to $200 million per week, subject to the prior written approval of the creditors’ committee and the ad hoc committee, or with the endorsement of the court.
FTX’s Special Provisions for Bitcoin, Ether, and Insider Tokens
In a separate decision-making process, FTX retains the ability to sell Bitcoin, Ether, and insider-affiliated tokens after providing a 10-day notice to the committees and the U.S. trustee, appointed by the United States Department of Justice. These sales will also be orchestrated through an investment adviser. Information about these sales will remain restricted to professionals, with a redacted version made accessible to the public. Furthermore, the sales will be open to written objections from the committees and the U.S. trustee. In such cases, the sales will be postponed until the objections are resolved or the court mandates the sale.
These additional conditions introduced in the September 12 draft order are seen as precautionary measures to uphold market stability amidst the influx of FTX assets. However, some industry observers point out that these sales are expected to represent only a fraction of the overall trading volume and might not exert significant influence. As per a recent shareholder update, FTX boasts approximately $833 million worth of Bitcoin and Ether.
It’s important to note that FTX is granted permission to engage in hedging arrangements utilizing Bitcoin and Ether, provided it receives prior approval from the committees. Additionally, these assets can be employed for staking purposes, as outlined in the guidelines. Notably, the sale of FTX Token remains contingent on further court authorization, underscoring the careful scrutiny surrounding this complex bankruptcy case.