Key Takeaways:
- The Trustee objected to FTX’s plans to sell its divisions, among other enterprises, in Europe and Japan.
- United States disputes FTX asset sales.
The U.S. Trustee reportedly objected to the bankrupt cryptocurrency exchange FTX’s plans to sell LedgerX, a clearinghouse for digital currency futures and other businesses, on January 7.
According to the complaint, U.S. Trustee Andrew Vara demanded an impartial investigation before any sales because he believed sensitive information about the exchange’s bankruptcy would be compromised. The report claims:
“The sale of potentially valuable causes of action against the Debtors’ directors, officers and employees, or any other person or entity, should not be permitted until there has been a full and independent investigation into all persons and entities that may have been involved in any malfeasance, negligence or other actionable conduct.”
As a U.S. trustee, Vara works for the Department of Justice, which oversees bankruptcy cases in the country. Vara is responsible for ensuring bankrupt corporations are not acting in a way that might harm creditors or other parties involved in the case.
The new management of FTX intended to sell its subsidiaries in Japan and Europe, as well as the derivatives exchange LedgerX and the stock-clearing platform Embed, to recoup lost funds from the exchange’s clients. Lawyers for FTX contended that selling these companies would maximize value to the FTX state in a document filed on December 15.
The units were recently bought and are currently operated separately from FTX, according to the lawyers for FTX, so a prospective sale of them would be considerably more manageable. It was intended for the company’s auctions to begin in February with the sale with Embed and continue with three additional auctions in March.
In November, due to the failure of its parent company, FTX Japan was subject to business improvement and suspension orders. Cyprus’s Securities and Exchange Commission requested that FTX Europe’s licenses and operations be suspended.
More than 110 parties are pursuing one or more of the 134 businesses included in the bankruptcy proceedings. FTX has already made 26 confidentiality agreements with counterparties.
Sam Bankman-Fried, the former CEO of FTX and founder of the company, pled not guilty to all charges of wire fraud, securities fraud, and campaign financing violations in connection with the collapse of the cryptocurrency exchange on January 3.
