Among the assets of the bankrupt FTX exchange is LedgerX, the sale of which has just been approved.
Not to be confused with the French company Ledger, which makes the hardware wallet of the same name, LedgerX is a different company and deals in options, futures and clearing services.
Specifically, it is a crypto futures and options exchange with a clearing house regulated by the US Commodity Futures Trading Commission (CFTC). It is still an active platform and is owned by FTX.
Summary
The FTX collapse
Following the collapse of FTX in November last year, the administration of its assets was placed in the hands of the receiver.
The receiver is obviously trying to find funds to return as much as possible to creditors.
To this end, a motion was filed with the bankruptcy court in April to sell LedgerX to M7 Holdings, a subsidiary of Miami International Holdings.
This motion was approved yesterday by Judge John Dorsey of the US Bankruptcy Court for the District of Delaware, and is expected to raise around $50 million for FTX.
This is a relatively small amount compared to the mountain of outstanding debt the bankrupt company has, but it will at least provide some liquidity.
It should be remembered that although FTX is closed, it continues to incur large expenses precisely because of the legal process of bankruptcy administration.
FTX sells LedgerX
The lawyers who spoke to Judge Dorsey at the hearing did not object to the sale of LedgerX.
Instead, an objection was raised by the representative of OKC USA Holding, one of the other bidders for LedgerX, who, while not objecting, argued that his company could seek damages because a partner of the FTX debtors, Bruce Mendelsohn, allegedly made “not true” statements to the CFTC about OKC’s regulatory obligations.
The sale of LedgerX is not the first sale of FTX assets approved by the liquidator, although there does not appear to be any plan to repay debtors at this stage.
Repayment of debts
In fact, some of FTX’s creditors have already been able to recover their money. These are Japanese users of the exchange, as FTX Japan allowed them to access the platform and request withdrawals.
FTX was not a single exchange, but a platform of exchanges operating in different jurisdictions with different companies.
Some of these companies were solvent, so the idea was to allow users of exchanges whose management companies were solvent to request withdrawals.
Initially it was thought that FTX.US, the exchange dedicated to the US market, might also be solvent, but so far withdrawals have not been resumed.
The main problem lies with FTX.com, the international exchange based in the Bahamas, which is so heavily in debt that it is having to divert resources from other group companies in order to try to partially repay its creditors.
At the moment, it does not seem possible that FTX’s creditors will be repaid in full. It is not even known exactly what percentage of the funds will be repaid, nor when this might happen.
However, it seems very unlikely that the sale of the valuable assets still owned by the group alone will be able to raise enough money to cover most of the debt.
One would probably have to hope for a new bull run in the crypto market, so that the cryptocurrencies still held by the company would appreciate enough to cover a substantial part of the debt.Â
Indeed, it should be remembered that the debt is calculated in fiat currency at the time of the bankruptcy filing, and this value will not change over time even in the event of a new bull run.
