In a recent twist of fate, the bankrupt cryptocurrency exchange FTX has expressed an interest in excluding its Dubai unit from U.S.-based bankruptcy proceedings. According to court filings unveiled last Thursday, the beleaguered exchange established 102 associated entities under Chapter 11 cases throughout the globe in line with its U.S. bankruptcy filing last November. FTX Dubai, birthed by the company’s European wing in February 2022, was looped into the proceedings.
However, what lingers beneath the surface is FTX Dubai’s inactivity before the U.S. bankruptcy filing. The court filing purports that the Dubai segment harbors no reasonable likelihood of rehabilitating its operations, as asserted by the bankrupt estate. This inability to reactivate the business in United Arab Emirates hence presents a fitting reason to request dismissal.
A fascinating component, revealed in the court filing, is the financial stability of FTX Dubai on the balance sheet. According to the debtors, this insolvency-free status makes a solvent voluntary liquidation procedure under UAE laws an appealing venture as it permits an expedited distribution of the available cash balance following the culmination of all outstanding liabilities and asset liquidation.
What remains discernable in the court filing, however, is the request for the dismissal being a necessary shift to guard the debtors. It also allows them to perform tasks such as compensating pre-bankruptcy wages and salaries, benefits, and other expenses to Dubai employees. In effect, this raises the question of how competently a company can protect its employees amidst bankruptcy.
It’s undeniable that any court orders in effect during FTX Dubai’s involvement in the proceedings should sustain. Yet, this announcement triggers an anticipation for what the future holds, not only for FTX and FTX Dubai employees but also for the global crypto community. Critical discussions surrounding the bankruptcy and voluntary liquidation impacting a sector that is often associated with high volatility and a lack of regulation, are sure to erupt.
The court’s decision on this request, set for August 23, is eagerly watched by stakeholders. The saga hardening FTX’s stance backs the crypto space into a contentious corner, with a significant question hanging above the head of the industry – can the reliability of such operations hold water in times of crisis? An answer to this question will soon be revealed, redefining the future trajectory of cryptocurrency platforms.
Source: Coindesk
