FTX court approval to sell its crypto assets

FTX, a crypto exchange that filed for bankruptcy in June 2023, has received permission from a US court to liquidate its remaining cryptocurrency holdings. The move will allow the company to repay its creditors in US dollars and reduce the risks associated with the volatile crypto market.

According to a court filing, FTX has over $3 billion worth of crypto assets, including bitcoin, solana, ethereum, and aptos. The exchange had suffered massive losses due to a series of cyberattacks, regulatory crackdowns, and customer lawsuits. FTX had also failed to secure adequate insurance coverage for its operations.

On Wednesday, US Bankruptcy Judge John Dorsey approved FTX’s proposal at a court hearing in Wilmington, Delaware. The judge allowed FTX to sell up to $100 million worth of cryptocurrency per week and enter into hedging and staking agreements that will enable FTX to minimize the risk of price fluctuations and earn passive income on more mainstream crypto assets like bitcoin and ether.

FTX’s lawyer, James Peck, said that the liquidation plan was in the best interest of the creditors and the estate. He argued that holding onto the crypto assets would expose FTX to significant market risks and potential legal challenges from regulators and customers. He also said that FTX had consulted with several experts and market participants to determine the optimal way to sell its crypto assets without disrupting the market or affecting the prices.

FTX’s creditors include banks, payment processors, vendors, employees, and customers. The exchange owes about $1.2 billion to its customers, who have filed various claims for refunds, damages, and interest. Some of the customers have also filed class-action lawsuits against FTX, alleging fraud, negligence, breach of contract, and violation of consumer protection laws.

The court’s approval of FTX’s liquidation plan comes amid a turbulent time for the crypto industry. Several governments around the world have tightened their regulations on crypto exchanges, citing concerns over money laundering, tax evasion, and investor protection. China, for instance, has banned all crypto-related activities in the country and cracked down on mining operations. The US Securities and Exchange Commission (SEC) has also increased its scrutiny on crypto exchanges and products, especially those involving decentralized finance (DeFi) and stablecoins.

Despite these challenges, the crypto market has shown resilience and growth in recent months. Bitcoin, the largest cryptocurrency by market capitalization, has risen by over 40% since July 2023, reaching above $26,000 as of September 14. Other cryptocurrencies, such as solana and aptos, have also surged in popularity and value, attracting more investors and developers to the space.

FTX’s liquidation plan is expected to take several months to complete. The exchange hopes to restart its operations once it settles its debts and resolves its legal issues. However, it remains unclear whether FTX will be able to regain its reputation and market share in the competitive and dynamic crypto industry.

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