FTX Faces Uphill Task To Sell LedgerX, Other Businesses
FTX has failed to provide complete financial disclosures regarding the entities it intends to sell, a US bankruptcy trustee said
Source: Shutterstock / K illustrator Photo, modified by Blockworks
Andrew Vara, the US bankruptcy trustee in FTX’s case, on Saturday filed an objection to the bankrupt company’s plans to sell four of its businesses, arguing FTX has provided “very little information” on what is being sold.
The businesses include crypto derivatives exchange and clearing house LedgerX, custody platform Embed, FTX Japan and FTX Europe.
Vara wrote in his Delaware court filing that FTX hasn’t outlined their financial affairs including assets and liabilities of each entity, and that it’s looking to delay this documentation until after the sale hearings.
“Without these filings, there is no information regarding the nature or value assets of the Debtors whose businesses the Debtors seek to sell,” he said.
Vara called for an independent investigation into the businesses before they can be sold, suggesting that “there is serious concern” about them being involved in FTX’s bankruptcy and holding related information.
“The sale of potentially valuable causes of action against the Debtors’ directors, officers and employees, or any other person or entity, should not be permitted when there has been serious allegations of wrongdoing, and no investigation yet into the scope of such wrongdoing, or the persons and entities that may have been involved,” the filing said.
FTX filed for bankruptcy in November, then sought court approval to sell four affiliated businesses on the grounds that they were supposedly solvent and that each was relatively independent of the parent company.
Lawyers for the exchange stressed that they wanted any sale process to be quick, as the business value could decline due to suspended operations. Some 111 parties were interested in purchasing either one or more businesses as of the last update.
Vara also suggested that the sale should not be allowed since FTX insiders have been criminally charged, and their counterparts working at subsidiaries should not be overlooked.
A hearing on the matter is scheduled for Wednesday, Jan. 11 at 9:00 am ET.
Former FTX CEO Sam Bankman-Fried was arrested last month and is currently under house arrest as he awaits his October trial. While he has pleaded not guilty to criminal charges, his former colleagues Caroline Ellison and Gary Wang have pleaded guilty to federal charges and are cooperating with investigators.
US prosecutors are now reportedly inspecting former FTX chief of engineering Nishad Singh for his role in connection with the exchange’s fraudulent practices.
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