FTX will ask US bankruptcy judge John Dorsey in Delaware to approve the sale proceedings of its subsidiaries LedgerX, Embed, FTX Japan and FTX Europe, in order to raise funds for its clients, who have potentially lost billions of dollars. dollars.
FTX founder Sam Bankman-Fried, 30, was charged with two counts of wire fraud and six counts of conspiracy last month in Manhattan federal court for allegedly stealing deposits from clients for paying debts of his hedge fund, Alameda Research, and for lying to equity investors about FTX’s financial condition. He pleaded not guilty.
The four companies that FTX intends to sell are relatively independent of the larger FTX group, and each has its own separate client accounts and separate management teams, according to FTX court documents.
The cryptocurrency exchange said it is not committed to selling any of the companies, but has received dozens of unsolicited offers. FTX expects to generate additional bids by scheduling auctions in February and March.
The US Trustee, a bankruptcy watchdog that is part of the Justice Department, opposed the sale of the affiliates before a full investigation could be carried out into the extent of the FTX fraud allegedly carried out by Bankman -Fried.
The former billionaire acknowledged flaws in FTX’s risk management practices, but said he did not believe he was criminally responsible.
In addition to lost client funds, the company’s bankruptcy also cost equity investors potential billions of dollars. Some of those investors were disclosed in a court filing on Monday, including American football star Tom Brady, Brady’s ex-wife, supermodel Gisele Bndchen and New England Patriots owner Robert Kraft.
FTX has asked to keep the names of its clients secret for at least six months, despite objections from media companies such as the New York Times and the US Trustee. FTX said it may seek further extensions, subject to court review.
The company argued that typical bankruptcy rules that require disclosures about creditors, including the 9.5 million customers, could expose them to scams, violate privacy laws and allow rivals to poach them, which would undermine the value of FTX in its search for buyers.
FTX’s request was supported by its official committee of creditors and by ad hoc groups of FTX clients.
Media companies have argued that creditors should not be allowed to fight anonymously over how much they should receive.