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FTX, the bankrupt crypto exchange, has filed a petition with a court to remove its Dubai unit from ongoing restructuring proceedings in the United States.
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When the bankrupt crypto exchange filed for bankruptcy in the U.S. in November of last year, it launched Chapter 11 cases for 102 affiliated entities from around the world.
However, in a court filing on August 2, FTX argued that its Dubai unit did not conduct any business before the bankruptcy filing; therefore, it is unlikely that the subsidiary’s operations can be improved. The court will hear the first hearing on the matter on August 23.
In the filing, the crypto exchange stated that FTX is solvent and that, therefore, a voluntary liquidation procedure following the laws of the United Arab Emirates would allow for the timely distribution of the positive cash balance and the liquidation of all assets after the payment of all outstanding debts.
Virtual Assets Regulatory Authority (FTX)
FTX Dubai is a wholly owned subsidiary of FTX’s European arm, which has obtained a virtual asset service provider license from the Virtual Assets Regulatory Authority (VARA). FTX Dubai currently holds approximately $4.5 million in a few accounts, of which $4 million is restricted by VARA as license collateral. On July 25, VARA confirmed to FTX management that such restricted cash would be released in the context of FTX Dubai’s liquidation following the laws of the United Arab Emirates:
“All of FTX Dubai’s assets are located in the United Arab Emirates and a significant portion of FTX Dubai’s pre-sale activities took place in the United Arab Emirates. The Emirates is in the best interests of the Debtors and their property.”
It is expected that FTX Dubai will agree with the appointed liquidator to implement basic administrative procedures and promote the orderly and efficient management of the liquidation.
The bankrupt exchange filed for bankruptcy on November 11, 2022, and the exchange launched bankruptcy proceedings for 102 affiliated entities worldwide.