Court Gives FTX Green Light To Sell Billions In Crypto Assets

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Bankrupt cryptocurrency exchange FTX has been given approval to liquidate crypto assets worth billions by the judge overseeing the exchange’s bankruptcy proceedings.

The move will allow the exchange to repay its US customers in US Dollars and help minimize any risk related to price volatility in the crypto markets.

FTX Can Sell Assets Worth Billions

United States Bankruptcy Judge John Dorsey, who is overseeing the exchange’s bankruptcy proceedings, has given his approval to FTX’s proposal to sell its crypto assets. This means the exchange can sell around $3.4 billion worth of cryptocurrency, including Solana, Bitcoin, Ethereum, and a host of other cryptocurrencies. The company had outlined its plan to sell its crypto assets back in August. It will see the appointment of Mike Novogratz’s Galaxy Digital as the investment manager to oversee the sale.

According to the plan, FTX can sell $100 million worth of tokens per week. This limit could be increased to $200 million on an individual token basis. Additionally, the exchange can also enter into hedging and staking agreements. This will allow it to minimize any risk arising from price volatility and earn a passive income on cryptocurrencies such as Bitcoin (BTC) and Ether (ETH).

Judge Dorsey stated that he would allow FTX to raise its weekly maximum limit if the exchange could get written authorization from the court. However, a footnote on the court order clarifies that the sale of Bitcoin, Ethereum, stablecoins, and the redemption of stablecoins will not count towards the $100 million weekly limit imposed by the judge. Furthermore, the limit will also not include transactions made to bridge tokens from non-native blockchains back to their native networks.

Risk To Crypto Markets

FTX acknowledged that its attempts to liquidate its tokens could significantly move crypto markets. As such, it hired Galaxy Digital to manage the risk that “information leakage” could lead to short-selling activity and sharp declines in crypto asset prices. However, FTX also stated that holding its current crypto portfolio also carries significant risk for the exchange and potentially locks it with holding certain assets even as their price declines.

FTX had revealed in a court filing on Monday that it held a total of

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Author: Amara Khatri

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