The saga of the FTX bankruptcy saga has taken yet another twist. Recently, FTX has submitted a plea to exclude its Dubai entity from the prevalent bankruptcy proceedings ongoing in the United States. The underlying argument FTX put forward, in this case, is that FTX Dubai had not launched before November 2022 and thereby, the company sees no requirement for aligning Dubai operations with the ongoing restructuring.
A crucial factor also mentioned by the company is the need to settle pre-bankruptcy wages for its personnel and provide protective measures for its debtors. Furthermore, FTX Dubai is reportedly balance-sheet solvent and the debtors believe that observing principles of United Arab Emirates’ law regarding solvent voluntary liquidation would facilitate a proper allocation of the positive cash balance post-debt payment and full asset liquidation.
Come August 23, the presiding court will conduct its first hearing on the issue as FTX Dubai plans a system overhaul in the region along with an exchange relaunch. The company’s court filings indicate that liquidation could expedite the distribution of initial liabilities, which potentially benefits all stakeholders involved.
FTX spiraled into bankruptcy in November 2022 and encompassed 102 global entities, including FTX Dubai, as an asset protection measure amidst investigations into former CEO Sam Bankman-Fried and sister firm Alameda Research.
FTX Dubai, a subsidiary arm of FTX’s European unit, made history as the initial European exchange to obtain a license from the Virtual Assets Regulatory Authority (VARA). This development encouraged optimistic future predictions for the platform. However, following the firm’s spiral into bankruptcy, VARA repealed the license, citing protection measures for investors as the main reason.
At present, FTX Dubai holds $4.5 million across various accounts with VARA securing $4 million as a safeguard for the initial license. According to the rules set in the bankruptcy proceedings, VARA revealed last month that the $4 million would be distributed according to the United Arab Emirates’ law.
With every one of FTX Dubai’s assets being placed in the United Arab Emirates and the majority of its prepetition operations conducted there, it is the belief of the Debtors that the timely voluntary liquidation of FTX Dubai following UAE laws would best serve the interests of the debtors and their estate. Moving forward, FTX Dubai is expected to strike a deal with the corporate liquidator to perform basic administrative operations preceding the court’s final verdict.
Source: Cryptonews
