The anticipated court case regarding FTX’s grand $3.4 billion crypto sell-off has finally taken place, with the judge ruling in favour of the defunct exchange’s proposal.
As previously reported, FTX’s proposal was sent to the US Bankruptcy Court for the District of Delaware, where it asked permission to sell, stake and hedge its crypto holdings in order to pay back creditors.
Ultimately, Judge John Dorsey overruled two objections to approve the motion- meaning to reiterate, FTX is now able to sell, stake and hedge its $3.4 billion worth of crypto holdings in order to repay its unfortunate former users.
The ruling marks the close of a filing that was first made in August. Here, the rationale for FTX’s staking and hedging plans were explained, with the former relating to ‘low risk returns’ being generated on ‘otherwise idle digital assets,’ and the latter allowing the exchange ‘to limit potential downside risk prior to the sale of such Bitcoin (BTC) or Ethereum (ETH)’.
Another interesting talking point from the ruling came when the judge asked who deposited the assets in question- i.e. whose are they? In a conflicting response, one FTX-representing attorney stated that they’re ‘of the debtors,’ whilst another said that all the assets were shovelled into a single pool, and therefore they’re ‘not traceable to the individual customer’.
So… in addition to hiring Galaxy Digital’s Mike Novogratz as an advisor, the collapsed crypto exchange now has the arduous task of maximising the sales, stakes, and hedges of its $1.16 billion of Solana (SOL), $560 million of Bitcoin, and its remaining whale-worthy amount of other altcoins.
And with an approved case, we can also confirm what we learnt in previous case updates- that is, that sales will be made on a weekly basis to the tune of $100 million, and that FTX will keep the US Trustee privately updated on its market-moving sale actions, as well as the ad hoc committees representing FTX’s creditors.
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This article is intended for educational purposes and is not financial advice.
