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FTX gets court permission to sell its LedgerX business to raise funds to pay off creditors


Bankrupt cryptocurrency exchange FTX received permission from the US Bankruptcy Court on Thursday to sell its LedgerX business for $50 million (nearly Rs. 408 crores), raising additional funds to pay off creditors.

At a hearing in Wilmington, Delaware, US bankruptcy judge John Dorsey signed off on the sale of non-bankrupt cryptocurrency derivatives trading platform FTX LedgerX to a subsidiary of Miami International Holdings.

Miami International Holdings owns the Bermuda Stock Exchange and several stock exchanges registered in the United States, including the Miami International Stock Exchange.

FTX is trying to pay back an estimated $11 billion (roughly Rs. 89,850 crores) to customers through a combination of asset sales and redemption measures. Since filing for bankruptcy in November, FTX has recovered more than $7.3 billion (nearly Rs. 59,630 crores) in liquid cash and crypto assets, the company said in April.

As part of that broader effort, FTX said on Wednesday that it will seek repayment of nearly $4 billion (roughly Rs. 32,670 crore) from Genesis Global Capital (GGC), the bankrupt lending arm of crypto firm Genesis.

FTX said in a lawsuit that Genesis owed it the money as a result of transactions that occurred shortly before FTX filed for bankruptcy. Under US bankruptcy law, debtors can try to recover payments made in the 90 days before declaring bankruptcy so that money can be distributed more fairly among creditors.

Genesis was a major “feeder fund” for FTX hedge fund Alameda Research, lent Alameda crypto assets that it used for further loans and investments, according to FTX.

At one point, Alameda owned $8 billion (roughly Rs. 65,340 crores) in loans from Genesis, according to FTX. FTX said Genesis, unlike other creditors, was largely paid off prior to FTX’s bankruptcy.

Companies in the cryptocurrency lending industry have been very intertwined during a turbulent 2022 that saw many go bankrupt. FTX, a once prominent crypto exchange, has filed for Chapter 11 amid allegations that its founder, Sam Bankman-Fried, used FTX clients’ funds to prop up Alameda’s balance sheet.

Bankman-Fried was indicted on fraud charges for his role in the company’s collapse, and has pleaded not guilty. Former members of his inner circle have pleaded guilty and agreed to cooperate with prosecutors.

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Joanna Swanson

Joanna Swanson is Europe correspondent at the Thomson Reuters Foundation based in Brussels covering politics, culture, business, climate change, society, economies and inclusive tech. With specific focus in breaking news, she has covered some of the world's most significant stories.