FTX’s LedgerX to Release $175M for Bankruptcy Proceedings

Bahamian-headquartered cryptocurrency exchange FTX which is currently undergoing a bankruptcy process wants to explore one of its few solvent associates for funds. 

FTX’s LedgerX plans to release up to $175 million to be used in the bankruptcy proceedings. Ultimately, the money will be used to offset some debts to creditors as FTX currently owes its top 50 investors up to $3 billion with almost a million creditors.

LedgerX, which was acquired by FTX US and rebranded as FTX US Derivatives, set aside $250 million as it prepared to receive regulatory authorization to clear crypto derivatives trades without intermediaries. This $175 million which it plans to release to FTX comes from this reserved fund. 

Owing to the fact that FTX US Derivative filed for bankruptcy alongside FTX and some of its other 130 associates, the firm has withdrawn its application from US Commodity Futures Trading Commission (CFTC) to become a self-sustaining clearing house. This alone makes a lot of funds available for repayment of affected creditors. 

New CEO Sees Viable Business in FTX

After John Ray III took over as Chief Executive Officer (CEO) of FTX from Sam Bankman-Fried, he mentioned that there were still some viable businesses in the ailing exchange. Since then, Ray III has been working tirelessly with other advisers in search of any form of cash either through the sales of digital assets or bank balances. 

The funds obtained from these alternative means were added to the available pool to pay off investors who are less interested in finding out the outcome of the bankruptcy proceedings. The FTX Derivative Exchange is optimistic that this move by LedgerX would encourage other solvent corners to send in their contributions. 

The financial watchdog CFTC seems to be aware of this planned fund transfer, according to its spokesperson.

More probes and investigations are being opened into the liquidity crunch of FTX especially, to know why the exchange crashed in the manner which it did. Rostin Behnam, the CFTC chairman intends to appear before a US Senate Committee Hearing on Thursday to testify about the now-bankrupt FTX trading platform.

Similarly, the US House Financial Services Committee has now fixed December 13th for the hearing of the circumstances which led to the fall of FTX.