FTX Modifies Crypto Sale Plan to Appease US Government
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The bankrupt FTX exchange has revised its strategy for liquidating its substantial crypto holdings. The exchange’s new approach involves prioritizing the sale of its multi-billion-dollar crypto assets before distributing funds to its creditors, all while avoiding advance notice to the markets.
FTX Amends Plans
According to a filing dated September 12, this recent development is a response to concerns expressed by the U.S. Trustee, a division of the Department of Justice specializing in bankruptcy matters.
#FTX Tweaks Crypto Sale Proposal to Placate U.S. Government
The bankrupt crypto exchange wants to sell off its billions of dollars in crypto before returning funds to creditors – but doesn’t want markets forewarned
— Chihiro ♀ (@CryptoChihiro) September 13, 2023
On August 24, FTX submitted a proposal suggesting the appointment of Galaxy Digital Capital Management, led by Mike Novogratz, as the investment manager for overseeing the sale and management of their recovered cryptocurrency assets.
🚨 FTX wallets on the move🚨
Looks like they're gearing up for potential sell-offs.
— Pump House 🍥 (@pumphouz) September 3, 2023
Under the proposed plan, FTX’s estate would initially have permission to sell up to $100 million worth of tokens per week. However, there is flexibility to increase this limit to $200 million on a per-token basis.
These limits have been designed to minimize the potential adverse effects of token sales while ensuring that FTX can fully satisfy its creditors.
In addition to this proposal, the exchange also submitted a separate motion to hedge its larger holdings of Bitcoin and Ether.
However, the U.S. Trustee raised concerns about its plan, arguing that any intention to sell bitcoin (BTC) or ether (ETH) should be widely publicized to allow others to raise objections.
As a compromise, the company has agreed to keep the U.S. Trustee informed privately and involve committees representing the exchange’s creditors.
Furthermore, FTX would still not be required to provide advance public notice of transactions due to their potential impact on the market.
The fear of a significant crypto player selling up to $100 million in assets each week has already dampened cryptocurrency prices.
Nonetheless, FTX hopes this compromise will satisfy its critics, as Judge John Dorsey is scheduled to review the proposal during a hearing in a Delaware courtroom later today.
FTX Release Shareholder Presentation
On September 11, FTX publicly disclosed presentation materials for its upcoming shareholder meeting scheduled for September 11–12.
Preference Exposure in FTX presentation
Withdrawals: Valued at current pricing (31st Aug)
Deposits: Transaction time
Owed to FTX estate
15-Day: $11.2bn (intl) + $2.2bn (US)
90-Day: $21.4 (intl)+$3.6bn (US) pic.twitter.com/wlsAr8MP6C
— Sunil (FTX Creditor Champion) (@sunil_trades) September 11, 2023
The unrestricted section provides a comprehensive overview of the company’s current status and progress toward resolution.
The meeting will commence with an overview of the claims made against the cryptocurrency exchange, which amount to an astounding $65 billion. Over 2,300 non-customer claims have been filed, including claims from Genesis, Celsius, and Voyager.
However, claims from FTX Digital Markets are presumed to be either invalid or redundant, and the United States Internal Revenue Service’s claim, the largest at $43.5 billion, is considered subordinate.
As of August 2023, FTX received 36,075 customer claims totaling $16 billion, and agreements on 10% of these claims had been reached.
As a result, the company’s assets now stand at a substantial $7 billion, including digital assets, cash, brokerage investments, a venture portfolio, tokens, and real estate. Furthermore, FTX owns 38 properties in the Bahamas, valued at $222 million based on book value.
The exchange has already realized $588 million from avoidance claims related to FTX’s investments. Moreover, there is potential for an additional $16.6 billion in identified avoidance claims stemming from these investments.
In addition, FTX has identified more than 50 potential actions against “insiders,” including individuals such as Sam Bankman-Fried, Nishad Singh, Gary Wang, Caroline Ellison, and 46 others, with a cumulative value of $2.2 billion.
The company is also exploring the possibility of recovering $86.6 million in political and charitable donations and $190.3 million through over 884 potential actions against vendors.