ftx: FTX is seeking court rulings on asset sales and customer privacy

Crypto exchange FTX will ask a US bankruptcy court on Wednesday to allow it to auction off pieces of its business and keep the names of customers confidential for at least six months while it works to recover funds lost in an alleged massive scam.

FTX will ask US Bankruptcy Judge John Dorsey in Delaware to approve actions to sell affiliates such as LedgerX, Embed, FTX Japan and FTX Europe as a way to raise funds for clients who have lost potentially billions of dollars.

FTX founder Sam Bankman-Fried, 30, was charged with two counts of wire fraud and six counts of conspiracy last month in Manhattan federal court for allegedly stealing customer deposits to pay off debt from his hedge fund, Alameda Research, and lying to equity investors about FTX’s financial condition. . He has pleaded not guilty.

The four companies FTX intends to sell are relatively independent of the broader FTX group, and each have separate client accounts and separate management teams, according to FTX court filings.

The cryptocurrency exchange said it has no commitment to selling any of the companies, but it has received dozens of unsolicited offers. FTX expects to place additional bids by scheduling auctions in February and March.

The US Trustee, a bankruptcy watchdog that is part of the Department of Justice, opposed the sale of the subsidiaries ahead of an extensive investigation into the extent of Bankman-Fried’s alleged FTX fraud.

Discover the stories that matter to you

The billionaire once admitted deficiencies in FTX’s risk management practices, but said he did not believe he was criminally liable. In addition to losing customer money, the company’s collapse cost equity investors billions of dollars. Some of those investors were revealed in a lawsuit Monday, including NFL star Tom Brady, former Brady model Gisele Bundchen and New England Patriots owner Robert Kraft.

FTX has been required to keep the names of its clients secret for at least six months over the objections of media companies such as the New York Times and US Trustee. FTX said it may seek further extensions, subject to court review.

The company argued that typical bankruptcy rules requiring disclosure of creditors, including as many as 9.5 million customers, could expose them to fraud, violate privacy laws and allow competitors to cheat them, undermining FTX’s value while it looks for buyers.

The FTX application has been supported by the official creditors committee and dedicated groups of FTX clients.

The media companies argued that creditors should not be allowed to fight anonymously over how much money they should receive.

Stay up to date with important tech and startup news. Subscribe to our daily newsletter for the latest must-read tech news, delivered straight to your inbox.

Related Posts

Leave a Reply

Your email address will not be published. Required fields are marked *