In a move aimed at addressing its burgeoning financial woes, FTX, has partnered with its debtors to present a proposal to the US bankruptcy court in Delaware.
Their objective? The sale of trust assets.
The proposed sale centres around a collection of funds from Grayscale and Bitwise that carry an approximate total worth of close to $750 million.
Should the proposal pass, it does not necessarily mean that the assets in question will be liquidated immediately.
Rather, the proposal is for the permission to sell – this permission will allow the management to proactively handle the risks linked to price fluctuations from the sale.
This will prevent FTX from realising any greater losses during the sale of such assets.
The sale of these trust assets will then likely ready the estates for future payouts to creditors – ensuring a streamlined process for selling these assets at an opportune time.
Since they are handling such large sums of money, timing is exceptionally important in FTX’s liquidiation.
According to the proposal, it was conceived to maximise returns for creditors and facilitate an equitable allocation of funds within the debtor’s reorganisation plan.
Diving in, the proposal will not only include an investment adviser but also the establishment of a pricing committee where all stakeholders will have representation.
The investment adviser’s duty then will be to secure a minimum of two bids from different counterparties before asset sales, ensuring transparency and a fair determination of market value.
This sale will likely alleviate some of the debt that currently plagues the now-defunct exchange, which owes its customers close to some $8.7 billion worth of assets.
In January this year, FTX, through its lawyer, announced that it has recovered more than $5 billion in liquid assets.
Andrew Dietderich stated then that it was working to liquidate another $4.6 billion since then.
FTX, once a prominent name in the crypto exchange realm, filed for bankruptcy in November the previous year, following reports of misappropriated customer funds.
Coinlive reported in October this year how a FTX-tagged wallet and an Alameda-tagged wallet was observed selling close to 10 million worth of cryptocurrencies to Binance and Coinbase.
If all goes to plan, it is projected that FTX may be able to reach its goal of returning 90% of all customer funds.