The U.S. Bankruptcy Court for the District of Delaware has approved the sale of LedgerX, a derivatives trading platform owned by FTX, to M7 Holdings for around $50 million. The approval came after FTX debtors filed a motion in April to sell LedgerX to M7 Holdings, an affiliate of Miami International Holdings.
The decision came out in the May 4 hearing, as Judge John Dorsey finally granted the motion for FTX to sell their only remaining solvent entity after their bankruptcy to the Miami International Holdings affiliate company.
The presiding judge approved the motion, saying he had read all the relevant papers and was satisfied with the proceedings. Lawyers present at the hearing noted that no parties voiced any disapproval.
“Well, that was easy,” said Judge Dorsey on the brief hearing where no one objected to his decision.
The ruling is a positive step forward for FTX’s case following its Chapter 11 bankruptcy filing in November 2022.
On August 21, FTX.US — the American affiliate of FTX — purchased LedgerX for nearly $300 million. Following the new sale, M7 Holdings will acquire the company for just a fraction of its price two years ago.
CFTC Chairman Rostin Behnam revealed during a congressional hearing about the collapse of the crypto exchange that LedgerX was “solvent,” “healthy” and “operational” compared to other FTX entities.
FTX declared bankruptcy in November 2022. Prosecutors accused the company of criminal mismanagement. Co-founder and former CEO Sam Bankman-Fried is currently facing 13 charges, including money laundering and wire fraud.
The bankruptcy court previously approved the sale of certain FTX entities in January 2023 as part of the bankruptcy proceedings. However, the court has not yet ruled on the motion requested by several media outlets to expose the identities of certain FTX customers to the public.
Those who are against the motion argued that not allowing certain private information to be redacted could expose individuals to be the targets of scammers and bad actors.
Bankman-Fried was banned from using online messaging apps since March 2023 as part of his bail conditions. He now stays at his parents’ home in California, awaiting his trial on October 2023.
While the sale of LedgerX represents a significant loss for FTX, it is a necessary step in its efforts to reimburse its clients and move forward from its tumultuous recent history.
Efforts to recover more funds
Despite having to sell LedgerX for less than half its worth, FTX is still hoping to recover more funds in light of its bankruptcy. A day before the May 4 hearing, FTX representatives also attended the bankruptcy court in a different city.
The defunct company is seeking to recover around $4 billion from bankrupt crypto lender Genesis and a still-solvent British Virgin Islands-based entity to recover value for its creditors.
FTX’s lawyers filed a request in a New York bankruptcy court seeking $1.8 billion in loans and a $273 million collateral pledge that Genesis allegedly obtained from FTX’s sister trading firm Alameda Research.
FTX blamed Genesis as “one of the main feeder funds for FTX and instrumental to its fraudulent business model.”
The former second largest crypto exchange in the world is seeking the clawback clause under bankruptcy laws that would allow it to recoup “avoidable transfers” that took place in 90 days before a company declares bankruptcy.