The U.S. Bankruptcy Court for the District of Delaware has granted permission to collapsed crypto exchange FTX to leverage its cryptocurrency assets to settle debts with creditors.
The FTX Court Decision: Judge John Dorsey gave the nod during a Wednesday court session, dismissing two counterarguments that had been presented against the proposal, according to Coindesk.
As a result, FTX can now sell, stake and hedge its cryptocurrency assets, which the exchange claims are valued at over $3.4 billion.
This development and its implications for the broader digital asset landscape will be a topic of interest at Benzinga's Future of Digital Assets conference on Nov. 14. The event will delve into the evolving dynamics and challenges of the cryptocurrency world.
During the hearing, a representative for the ad hoc committee of FTX customers voiced support for the plan. Meanwhile, an attorney for the unsecured creditors committee emphasized the urgency of the matter, stating, "The sooner we can get this process rolling, the better."
FTX previously filed a request in August, making a case that hedging its cryptocurrency would "allow the Debtors [FTX] to limit potential downside risk prior to the sale of such Bitcoin BTC/USD or Ether ETH/USD."
Furthermore, the exchange argued that "staking certain digital assets … will inure to the benefit of the estates – and, ultimately, creditors – by generating low-risk returns on their otherwise idle digital assets," as per the documentation submitted by FTX's legal team.
A point of contention arose when Judge Dorsey inquired if FTX could identify the original depositors of the assets.
An attorney for FTX clarified, "[FTX's] view is that the digital assets we're selling are assets of the debtors."
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Another legal representative added that these assets are pooled together, making it "not traceable to the individual customer."
In addition to the aforementioned approvals, FTX has expressed interest in bringing on board Mike Novogratz from Galaxy Digital BRPHF as an advisor.
Earlier in the week, FTX disclosed its possession of $1.16 billion in Solana SOL/USD, which is roughly 16% of the token's circulating supply, and an estimated $560 million in Bitcoin.
The remainder of FTX's portfolio comprises lesser-known illiquid tokens.
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