The FTX bankruptcy lawsuit has reached a crucial point with the approval of the sale of $3.4 billion worth of crypto assets by the United States Bankruptcy Court for the District of Delaware. The court also approved $1.3 billion in brokerage and government-recovered assets, as well as $2.6 billion in cash, bringing the total liquid assets to $7.1 billion.
Solana (SOL) is the cryptocurrency with the highest value for liquidation at $1.16 billion, followed by Bitcoin (BTC) at $560 million. Other assets to be liquidated include Ethereum (ETH), Aptos (APT), Tether (USDT), XRP (XRP), Biconomy Exchange Token (BIT), Stargate Finance (STG), Wrapped Bitcoin (WBTC), and Wrapped Ethereum (WETH).
Bitcoin, Ether, and insider-affiliated tokens can only be sold after providing a 10-day advance notice to U.S. trustees appointed by the Department of Justice. The court has also allowed hedging options for these assets, which means that FTX can use various financial instruments to offset losses.
The approval for such a large sale of crypto assets has drawn industry-wide attention, with concerns about the potential impact on the crypto market. However, legal experts believe that the court’s primary concern is the recovery of funds for creditors, rather than the potential market impact.
The discovery of billions of dollars in liquid assets has brought relief to many creditors in the case. Asset protection attorney Blake Harris believes that these assets offer more flexibility in asset management, allowing for a strategic approach that balances immediate legal requirements with broader market implications. However, it’s crucial to consider how these assets will be managed to prevent similar situations in the future.
Market analysts predict that the prices of Solana and Aptos may face price volatility after liquidation, based on the daily trading volume of each token.
To ensure that the liquidation of FTX assets doesn’t burden the crypto market, the bankruptcy court has taken measures to control the process. Assets will be sold through an investment adviser in weekly batches, and Galaxy Digital has been entrusted with maximizing returns for creditors while ensuring market stability. FTX is also allowed to utilize staking options available through qualified custodians.
The court has set caps on the sale of assets, starting with $50 million in the first week and increasing up to $200 million per week with the consent of the creditors’ committee and ad hoc committee.
While the FTX liquidation is not expected to have a significant impact on the crypto market, as strict controls are in place, the exchange’s saga is far from over. The former CEO’s legal team is currently negotiating special conditions ahead of the trial, and the exchange’s alleged illegal behavior has damaged public trust in the crypto ecosystem.
