Judge Allows Bankrupt FTX to Sell Its Crypto Holdings, Including BTC and SOL

Crypto exchange FTX can sell and invest its crypto holdings to pay back creditors, a judge in the U.S. Bankruptcy Court for the District of Delaware ruled Wednesday.

In a court hearing, Judge John Dorsey said that he approved the motion and overruled two objections that were made opposing the plan. This allows the bankrupt exchange to sell, stake and hedge its crypto holdings, which it said are worth over $3.4 billion.

An attorney representing the ad hoc committee of FTX customers supported the plan during the hearing, while a lawyer for the unsecured creditors committee said all of the involved parties looked to expedite the process.

“The sooner we can get this process rolling, the better,” he said.

FTX submitted a filing requesting permission to engage in these activities in August, arguing that hedging its crypto assets would “allow the Debtors [FTX] to limit potential downside risk prior to the sale of such bitcoin or ether,” while “staking certain digital assets … will inure to the benefit of the estates – and, ultimately, creditors – by generating low risk returns on their otherwise idle digital assets,” according to the filing by FTX’s lawyers.

The judge asked questions about whether FTX officials could tell who deposited the assets.

“[FTX’s] view is that the the digital assets we’re selling are assets of the debtors,” an attorney representing the exchange said. Another lawyer said the assets are all in one pool, and are “not traceable to the individual customer.”

The exchange also asked to hire Galaxy Digital’s Mike Novogratz as an adviser.

FTX revealed earlier this week that it holds $1.16 billion of solana (SOL) – approximately 16% of the token’s outstanding supply – and about $560 million in bitcoin (BTC). The rest of its holdings consist of lesser known illiquid tokens.

UPDATE (Sept. 13, 2023, 17:55 UTC): Adds additional detail.