In November 2022, the cryptocurrency exchange, FTX declared bankruptcy and entered Chapter 11 proceedings for 102 of its global units. Since declaring bankruptcy, FTX has filed a motion in court to remove its Dubai-based subsidiary from the restructuring proceedings taking place in the United States.
FTX Seeks to Protect Its Assets Ahead of FTX 2.0 Launch
On August 2nd, FTX submitted a legal document stating that its Dubai-based unit had not been operational prior to the bankruptcy declaration. As a result, the company believes that it is unlikely for the subsidiary to recover. The first court hearing on this matter is scheduled for August 23rd.
According to the legal document, FTX stated that its Dubai-based unit is financially solvent. As such, the company believes that initiating a voluntary liquidation process under the laws of the United Arab Emirates would enable the timely distribution of remaining funds after all debts have been paid and assets have been liquidated.
FTX Dubai is a fully-owned subsidiary of FTX’s European division, which holds a virtual asset service provider license issued by Dubai’s Virtual Assets Regulatory Authority (VARA). The Dubai-based unit currently has around $4.5 million in various accounts, with $4 million of that amount being held as security for the license by VARA.
On July 25th, FTX Dubai’s management received confirmation from VARA that the restricted funds would be released as part of the unit’s liquidation process, following the laws of the United Arab Emirates.
As all of FTX Dubai’s assets are located within the country and the majority of its pre-bankruptcy activities took place there, the company has determined that a voluntary liquidation under local law is in the best interest of all parties involved.
FTX Dubai is anticipated to reach an agreement with the designated liquidator to establish basic administrative processes and ensure a smooth and efficient liquidation process. On November 11th, 2022, FTX declared bankruptcy and initiated Chapter 11 proceedings for 102 of its global units.