FTX Exchange Sounds Alarm on Unauthorized Bids and Asset Sales

As the FTX Derivatives Exchange navigates its bankruptcy proceedings following its collapse in 2022, the exchange has sounded a cautionary notice regarding authorized bids and asset sales management.

FTX, in a statement posted on the X social platform, clarified that the sale of digital assets by FTX debtors, as mandated by the bankruptcy court, is exclusively managed by Galaxy Asset Management, the authorized investment manager.

(1/4) The FTX Debtors’ sale of Digital Assets pursuant to Bankruptcy Court Order no. 2505 is exclusively being handled by the FTX Debtors’ court-authorized Investment Manager, Galaxy Asset Management (GDAM@galaxy.com).

— FTX (@FTX_Official) March 1, 2024

FTX Exchange Bankruptcy Proceedings and Asset Management

Consequently, under Bankruptcy Court Order no. 2505, only offers submitted by Galaxy Asset Management will be considered for selling or buying solicitations and interested parties should be well informed. The purpose of this advisory is to provide guidance to relevant stakeholders, especially institutional purchasers ensuring legal conformity, on the correct protocols for engaging in asset auctions.

Additionally, FTX clarified that the unlocking schedule terms and conditions would apply to any sale of locked digital assets by the FTX Debtors. Despite being bankrupt, the exchange has been actively engaged in restructuring and repaying creditors, resulting in the successful recovery of $7 billion worth of assets designated for customer repayments.

FTX Legal and Financial Developments

In a significant development, FTX Derivatives Exchange received approval from a Delaware Bankruptcy Court, under the supervision of Judge John Dorsey, to sell more than $1 billion worth of its shares in Anthropic, an artificial intelligence enterprise. The ruling follows FTX’s resolution of objections raised by certain customers during a hearing held on February 22.

In December 2023, FTX debtors proposed a reimbursement plan for claimants based on crypto asset prices at the time of bankruptcy, including $16,871 for Bitcoin and $1,258 for Ether. FTX creditors pushed for repayments in the form of cryptocurrency holdings, but Judge John Dorsey rejected this request in his ruling on January 31, affirming the debtors’ proposal due to legal clarity.

In a recent development, amid its financial challenges, FTX aimed to recover the significant investment it had made in acquiring assets.

The bankrupt FTX exchange resolved a prolonged dispute regarding its European division as the exchange agreed to sell FTX Europe back to its original founders for $32.7 million. Initially acquired in 2021 in a noteworthy $323 million transaction, the Swiss startup Digital Assets AG (DAAG), later rebranded as FTX Europe, faced challenges in finding new ownership.

Bankman-Fried Sentencing Approaches

Meanwhile, Bankman-Fried, the former CEO of FTX, is confronted with legal consequences as a jury renders him guilty of seven charges during his criminal trial on November 3, 2023.

These charges encompass wire fraud, wire fraud conspiracy, securities fraud, commodities fraud conspiracy, and money laundering conspiracy. Bankman-Fried’s sentencing, carrying a potential maximum term of 110 years in prison, is slated for March 28. However, his lawyers have made a special request to the U.S court.