FTX Asks Court to Exclude its Dubai Subsidiary from Bankruptcy Proceedings
FTX exchange filed for bankruptcy proceedings in 2022. At the same time, 102 branches of FTX were added subsequently to the Chapter 11 proceedings. However, FTX has recently submitted a motion in the court asking for keeping its Dubai branch out of the bankruptcy proceedings.
It means that FTX intends to keep its Dubai wing out of the restructuring process taking place in the USA. To this effect, FTX lawyers informed the court on 2nd August that the Dubai branch did not conduct any business before bankruptcy filings.
The defense argued that the Dubai branch is not yet operational therefore any type of subsidy will not rehabilitate it. The courts have decided to arrange a meeting on the matter on 23rd August. In the court filings, the crypto trading platform maintained that FTX Dubai is a balance sheet solvent.
Therefore, the Dubai branch is going to undergo liquidation following the local laws of the United Arab Emirates. As per FTX, UAE regulators are going to ensure on-time distribution of balance after payment and payable settlements as well as asset liquidations.
FTX Dubai is associated with the European wing of FTX. At the same time, the cryptocurrency exchange wing holds a VASP or virtual asset service provider license. The financial documents of the firm have revealed that Dubai FTX owns $4.5 million held in various commercial accounts.
$4 million of the total holdings of Dubai FTX are reserved by VARA or Virtual Asset Regulatory Authority as collateral for warranty amount for issuance of its VASP license.
Meanwhile, FTX exchange has claimed that all the assets of the Dubai wing are located under UAE jurisdiction. Furthermore, the defense argued that all trading activities of the firm in question were contained within Dubai. Such that the debtors of the firm have demanded a timely distribution of the Dubai wing happening on a local scale in the form of voluntary liquidation.
The debtors also demand that the restructuring of the Dubai branch takes place following the legal jurisprudence of the UAE.
FTX Dubai to Appoint New Liquidators Under UAE Laws
FTX Dubai is currently working on appointing a new liquidation contractor who will be responsible for performing basic administrative tasks for the firm. At the same time, the new liquidator will supervise the liquidation and administration process.
It is worth noting that the FTX filed for a Chapter 11 bankruptcy on 11th November, 2023 while encapsulating all its 102 units around the globe. FTX has recently shared a plan to reorganize its debtors into various types of claimants and nominate one of these claimants to restart the FTX exchange.
The crypto enterprise has been making an effort to revive the defunct trading forum for international clients backed by third-party investors.
FTX was considered one of the top cryptocurrency exchanges in the world. However, its collapse affected some of the biggest firms within the crypto circuit. Genesis is a commercial trading enterprise that lost $175 million in locked funds following FTX’s demise. The next big name is Galaxy Digital which recently revealed its $76.8 million exposure to FTX.
Crypto.com has also declared $1 billion in assets and exchanges associated with FTX that the CEO of the firm has reportedly recovered while maintaining that the remainder of exposure to the exchange is only under $10 million at present.
