FTX Seeks Regulatory Approval for $3.4 Billion Asset Liquidation
FTX is currently seeking regulatory approval to liquidate $3.4 billion in crypto assets. The exchange’s legal team has submitted a proposal to the Delaware Bankruptcy Court, which is set to rule on the matter on September 13. If approved, the asset sale will be managed by Galaxy Digital, led by Mike Novogratz.
Under the proposal, FTX would be allowed to sell up to $100 million worth of tokens per week, with the possibility of increasing the limit to $200 million for individual tokens. The exchange’s crypto holdings include locked Solana tokens, FTT tokens, Bitcoin, Ethereum, as well as other assets like Aptos, Dogecoin, Polygon, XRP, and stablecoins.
Potential Impact on the Market
Previous instances of large-volume sales have had a significant impact on the cryptocurrency market. Market observers anticipate a decline in prices leading up to the sale. However, some argue that the impact may be limited, as the tokens held by FTX are not immediately liquid and are subject to vesting schedules.
For example, SOL tokens are locked in a vesting schedule until 2025, which means a potential buyer would have to abide by the schedule. Therefore, it is unlikely that the sale will have a short-term impact on the price of SOL.
FTX Sues LayerZero for Recovering Lost Assets
In addition to the asset liquidation, FTX’s legal team is also suing LayerZero, an onchain interoperability protocol, to recover $21 million in lost assets. FTX alleges that LayerZero withdrew the funds in the weeks leading up to its collapse, and accuses the protocol of fraudulent and preferential transfers.
LayerZero reportedly withdrew large sums of APT, AVAX, BNB, BUSD, FTM, MATIC, USDC, and USDT from FTX. The exchange is seeking to recover the funds and is also targeting LayerZero’s former COO and a subsidiary for transferring assets to controlled wallets.
Hot Take: Potential Impact on the Market and Legal Battle
The approval of FTX’s asset liquidation and the outcome of its lawsuit against LayerZero are set to have significant implications. While the sale may lead to a decline in cryptocurrency prices, the impact may be mitigated by the locked and vesting nature of the tokens held by FTX.
On the legal front, FTX’s case against LayerZero will determine whether the exchange can recover the lost assets. The outcome of this lawsuit could set a precedent for similar cases involving fraudulent transfers and property recovery in the crypto industry.
Overall, the next few weeks will be crucial for FTX and its legal team as they navigate both regulatory approval and the legal battle to protect their assets and recover lost funds.
By
By
By