Panic may be premature as FTX’s liquidation may not happen immediately
FTX, the cryptocurrency exchange that recently filed for Chapter 11 bankruptcy, may not kick off its liquidation immediately even if it secures approval by September 13, according to Hitesh.eth, a notable crypto commentator. This news offers some relief to concerned investors.
However, questions arise regarding FTX’s liquidation strategy for its proprietary token, FTT, which makes up $529 million of the assets to be liquidated. FTT’s limited liquidity and market depth raise concerns about the ease of selling these tokens.
FTX takes legal action to recover assets
In its efforts to recoup assets, FTX has initiated a series of legal maneuvers. It has filed a clawback lawsuit against LayerZero, an omnichain interoperability platform, seeking to recover $21 million. The exchange has also taken legal action against Ari Litan, LayerZero’s Chief Operating Officer, demanding $13 million, as well as pursuing $6.5 million from Skip & Goose, a firm owned by Litan.
Additionally, FTX is revisiting the promotional fees it paid to sports celebrities like Naomi Osaka and Shaquille O’Neal. The exchange had previously spent significant amounts on marketing campaigns involving these celebrities, including $3.2 million paid to Osaka.
Hot Take
Despite FTX’s bankruptcy filing, there may be hope for investors as the immediate liquidation of assets is not guaranteed. However, concerns remain about the liquidity and market depth of FTX’s proprietary token, FTT. FTX is taking legal action to recover assets, including filing a lawsuit against LayerZero and revisiting promotional fees paid to sports celebrities. These measures demonstrate FTX’s determination to overcome its financial difficulties and regain lost assets.
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