FTX Seeks to Exclude Dubai Arm from Bankruptcy Proceedings

August 10, 2023

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According to recent reports, defunct crypto-currency exchange FTX has filed a petition in court to have FTX Dubai, an entirely owned division of FTX’s European branch, excluded from existing restructuring procedures in the United States.

FTX Dubai Unlikely to Relaunch Operations

FTX contended in a court filing on Aug. 2 that its Dubai subsidiary did not conduct any sort of business prior to the bankruptcy filing, and hence it is unlikely to relaunch its operations. On August 23, the court will have an initial session on the matter.

As FTX Dubai is balance sheet solvent, the crypto exchange states that a voluntary “liquidation procedure in accordance with the laws of the United Arab Emirates would allow a timely distribution of the positive cash balance after payment of all outstanding liabilities and liquidation of all assets.”

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4.5M in Various Accounts

FTX Dubai presently has $4.5 million in various accounts, $4 million of which has been restricted by VARA as security for the license. The unit is authorized by a license from Dubai’s Virtual Assets Regulatory Authority (VARA), that acknowledged the crypto exchange’s Dubai management that such limited funds will be transferred in the wake of FTX Dubai’s liquidation.

UAE Law Comments on the Matter

The United Arab Emirates law said: “All of FTX Dubai’s assets are located in the United Arab Emirates and substantially all of FTX Dubai’s prepetition activities occurred in the United Arab Emirates, the Debtors have determined that a timely local voluntary liquidation of FTX Dubai in accordance with the laws of the United Arab Emirates is in the best interests of the Debtors and their estate.”

DoJ Attempts to Cancel FTX Founder’s Bail Bond

The US Department of Justice has recently announced plans to cancel SBF’s bail bond and launched a lawsuit on the young billionaire for seeking to harass Caroline Ellison, his former business associate, romance partner. Due to her assistance in Bankman-Fried’s illegal attempt to manipulate the price of FTT at SBF’s request, she was charged by the CFTC and SEC. In particular, Ellison and one of the firm’s executives, Gary Wang, pleaded guilty to crimes related to the collapse of the bankrupt exchange.