Key takeaways:
- To exclude its Dubai unit from ongoing restructuring procedures, FTX has filed a motion with the court.
- FTX initiated Chapter 11 cases for 102 affiliated entities worldwide when it filed for bankruptcy in the US.
In order to exclude its Dubai unit from ongoing restructuring procedures in the United States, bankrupt cryptocurrency exchange FTX has filed a motion with the court.
According to a court document filed on August 2 by FTX, the Dubai unit had no operations prior to declaring bankruptcy, thus, the subsidy is unlikely to help it revive such operations. The court’s initial hearing on the matter will begin on August 23.
FTX initiated Chapter 11 cases for 102 affiliated entities from all over the world when it filed for bankruptcy in the United States last November. One of the parties involved in the proceedings was FTX Dubai, a company that was founded in February 2022 and whose ownership is held by the European division of the business.
The crypto exchange stated in its filing that FTX Dubai is balance sheet solvent and that a voluntary bankruptcy procedure that complies with the “laws of the United Arab Emirates” would therefore enable timely disbursement of the positive cash balance following the payment of all “outstanding liabilities and liquidation of all assets.”
A virtual asset service provider license was secured by FTX Dubai from Dubai’s Virtual Assets Regulatory Authority (VARA), a direct subsidiary of FTX’s European arm. FTX Dubai now has $4 million limited by VARA as security for the license, while the remaining $4.5 million is spread among many accounts.
On July 25, VARA informed the management of FTX Dubai that, in accordance with United Arab Emirates law, such restricted funds would be released in the context of the liquidation of FTX Dubai:
“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.”
In order to implement fundamental administrative procedures and advance the orderly and effective administration of the liquidation, FTX Dubai is anticipated to get into an agreement with the designated liquidator.
