FTX has asked the court for permission to sell FTX Europe and FTX Japan
The group intends to auction off several platforms, as it believes it will enable them to resume normal operations and prevent the loss of customers and employees
FTX has asked the court for permission to sell FTX Europe, FTX Japan and two other firms from the group of companies undergoing bankruptcy proceedings. Lawyers for the exchange filed a petition for the auctions on Dec. 15.
On Nov. 11, the FTX exchange and about 130 other affiliated companies began voluntary bankruptcy proceedings under Chapter 11 of the U.S. Bankruptcy Code. This allows companies to get protection from claims from creditors during business reorganizations and debt restructurings.
Court filings say there are more than 100,000 FTX creditors, but there could actually be 10 times that many, the exchange executives acknowledged.
In a Dec. 15 motion, FTX is asking the court to approve the sale of the platforms to FTX Europe AG (Switzerland), FTX Japan Holdings K.K. (Japan) and two U.S. companies: the exchange and clearinghouse LedgerX and the depository platform Embed Financial Technologies Inc. together with its subsidiary Embed Clearing LLC. The auctions are scheduled to run from Feb. 21 to March 21, 2023.
FTX said in its filing that each of these businesses is under significant pressure from customers and employees. Loss of customers and employees is likely as long as the companies are owned by debtors, it said. According to FTX, selling these firms could allow them to continue or resume operations and, as a result, increase their value.
Because these platforms were acquired by FTX relatively recently, each is generally independent of the debtors' other operations, holdings and investments, the lawyers said. The motion explains that each of these companies maintained separate customer accounts, has a separate management team, Embed, LedgerX and FTX Europe are supported by separate IT systems, and Embed, FTX Europe and FTX Japan Holdings have separate headquarters. The relative independence of each of these companies' operations makes the potential process of selling them "relatively less complicated," according to court documents.
Embed and LedgerX provide services to U.S. customers, FTX Europe is the group's European business acquired in 2021, which also has subsidiaries in Cyprus and the UAE, while FTX Japan includes the exchange formerly known as Liquid Group Inc. serving Japanese residents and crypto trading platform Quoine Pte Ltd. in Singapore.
In early December, FTX Japan announced that it plans to resume withdrawals from local customers, which had been suspended on Nov. 8. A statement on the platform's website stated that the assets of Japanese clients are not part of FTX Japan's assets and are not related to the group's ongoing bankruptcy proceedings in the United States.