A judge in the US Bankruptcy Court for the District of Delaware has ruled that FTX – the exchange went bankrupt in Nov 2022 – can sell its crypto holdings to pay back creditors.
FTX submitted a proposal to the court at the end of August, requesting permission to sell its crypto assets in order to compensate users as well as limit the impact of crypto market fluctuations. The exchange also seeks authorization to hedge BTC and ETH to limit potential downside risk prior to the sale of these cryptocurrencies. For ETH, FTX wants to stake Ether for extra profits.
The exchange asked to hire Galaxy Digital’s Mike Novogratz as an adviser. The proposal guidelines allows FTX to sell $100-200 million per week. FTX is obliged to notify the US Department of Justice 10 days before selling the assets but doesn’t need to issue a notice to the public.
FTX earlier this week announced its asset report as of the finish of Aug 2023. The exchange is holding $3.4 billion in cryptocurrencies with high liquidity like Solana (SOL), Bitcoin (BTC), Ethereum (ETH), Aptos (APT), Tether (USDT ), XRP, etc.
The crypto community in recent days has been expressing concern about the possibility of FTX dumping tokens to the market, especially SOL. However, the majority of SOLs that FTX holds are actually locked up and will be unlocked gradually from now until 2027-2028. Anyway, the fact that $100-200 million in crypto liquidated by FTX every week is still a huge selling pressure on the crypto market.