Javier Hernandez FTX Trading Ltd. submitted a request this Tuesday to remove its subsidiary in Dubai, FTX Exchange FZE, from its ongoing bankruptcy cases, referencing the division’s absence of operational activity and assets.
Dubai’s FTX Exchange Likely to Undergo Voluntary Liquidation Following Dismissal Motion by Parent Company
In the petition lodged in a Delaware bankruptcy court, FTX claimed that FTX Dubai has not been involved in any business activity nor dealt with any customers. The digital currency exchange was granted an operating license in Dubai in July 2022, but it didn’t provide any services prior to the bankruptcy declaration made by FTX in November. Dubai authorities suspended FTX Dubai’s license soon after the bankruptcy announcement, and the license was terminated in July 2023.
FTX’s court documents noted that as there was no income-producing activity started by the Dubai subsidiary, there’s no reasonable prospect of it resuming operations. Furthermore, FTX emphasized that FTX Dubai is solvent and holds a positive cash balance, qualifying it for a voluntary liquidation process under the laws of the United Arab Emirates (UAE).
FTX contends that dismissing the Dubai division would facilitate an orderly shutdown and asset liquidation. The available cash can then be allocated promptly after clearing any outstanding debts. As of now, FTX Dubai possesses roughly $4.5 million spread across several bank accounts.
The petition suggests that bankruptcy proceedings for the subsidiary are unnecessary and would only lead to additional administrative costs. FTX maintained that the dismissal is in the best interest of the company and its creditors. If granted, the dismissal would enable FTX Dubai to proceed with liquidation in Dubai, with creditors retaining the right to assert claims against the subsidiary in these separate processes.
FTX Trading and more than 100 connected firms sought Chapter 11 bankruptcy protection in November 2022, attributing it to a significant liquidity crisis after revelations of financial mismanagement came to light. Sam Bankman-Fried, FTX’s founder, was taken into custody in December and accused of bilking investors out of billions. He has denied all charges.
The motion filed this Tuesday signifies that the task of dismantling FTX’s worldwide network will be a multifaceted process distributed across different legal jurisdictions. The court will make a decision on the Dubai subsidiary’s dismissal in a hearing scheduled later this month. FTX and its CEO and chief restructuring officer, John J. Ray III, recently revealed the debtor’s reorganization strategy which involves a plan to reestablish FTX as an “offshore crypto exchange.”
We’d like to hear your thoughts on FTX’s attempt to exclude its Dubai subsidiary from the bankruptcy proceedings. Please share your views and insights on this topic in the comments section below.
Table Of Contents
Frequently Asked Questions (FAQs) about FTX Bankruptcy Proceedings
Why does FTX Trading Ltd. want to dismiss its Dubai subsidiary from the ongoing bankruptcy proceedings?
FTX Trading Ltd. has filed a motion to dismiss its Dubai subsidiary, FTX Exchange FZE, from the ongoing bankruptcy proceedings because the subsidiary has not engaged in any operational activities, had any customers, or accrued any significant assets. FTX argues that this dismissal would allow for an orderly wind-down and liquidation of assets without the need for additional bankruptcy proceedings, reducing administrative expenses.
Who is Sam Bankman-Fried and what charges has he faced?
Sam Bankman-Fried is the founder of FTX Trading. He was arrested in December and charged with defrauding investors out of billions of dollars. However, he has pleaded not guilty to all charges against him.
What’s the current status of FTX Dubai’s license?
FTX Dubai’s operating license was suspended by Dubai authorities shortly after the parent company’s bankruptcy filing. The license expired in July 2023.
What will happen to the assets of the Dubai subsidiary if the dismissal is granted?
If the dismissal is granted, FTX Dubai could undergo liquidation in Dubai under UAE law. The subsidiary’s current positive cash balance, which is around $4.5 million spread across bank accounts, could then be used for timely distribution after paying outstanding liabilities.
What does the future look like for FTX Trading Ltd. and its affiliates?
The future of FTX Trading Ltd. is uncertain as it undergoes bankruptcy proceedings. Recently, the company’s CEO and chief restructuring officer unveiled a debtor reorganization strategy that included a proposal to reboot FTX as an “offshore crypto exchange.”
More about FTX Bankruptcy Proceedings
- FTX Trading Ltd. Files for Bankruptcy
- Overview of FTX’s Ongoing Bankruptcy Proceedings
- Details on Sam Bankman-Fried’s Charges
- FTX’s Proposed Reorganization Strategy
- Liquidation Process under UAE Law
6 comments
it’s kinda sad seein a giant like FTX fall apart like this, used to be such a reputable platform. also feel bad for Sam.
strategic move by FTX, can help minimise losses in bankruptcy. they could salvage something out of the mess after all.
well this is quite a turn…FTX taking out it’s own subsidiary from bankruptcy, looks like a strategic move.
offshore exchange, really? dunno how thats gonna work for them, seems kinda desperate to me… just my 2 cents.
am based out in dubai and heard about the license suspension, wondered why they never started operations. now it all makes sense.
no surprise there, FTX’s been in a tailspin since the scandal broke out. Hope the investors get their money back, fingers crossed.