New FTX chief says crypto group will pursue reorganization or sale

Collapsed crypto exchange FTX will attempt to sell or reorganize its business, its new chief executive said on Saturday as the company prepared to appear in US bankruptcy court.

“Based on our review last week, we are pleased to learn that many of FTX’s regulated or licensed affiliates, inside and outside the United States, have sound balance sheets, responsible management and valuable franchises,” said John Ray III.

Ray replaced FTX founder Sam Bankman-Fried as chief executive when dozens of the group’s subsidiaries filed for bankruptcy on Nov. 11 after the company was unable to respond. to billions of dollars in customer withdrawal requests.

FTX later said it believed it had over a million creditors. He is due to appear Tuesday in a first hearing in Delaware bankruptcy court.

“[I]It will be one of our priorities in the coming weeks to explore sales, recapitalizations or other strategic transactions involving these subsidiaries,” said Ray.

FTX asked the court to allow it to keep the names and identities of its creditors confidential, arguing that FTX had no traditional creditors and that disclosing its customers would harm it competitively.

“Public disclosure of debtors’ customer list could give debtors’ competitors an unfair advantage in contacting and poaching those customers,” FTX said.

FTX petitioned the bankruptcy court for approval to pay outside vendors it said were essential to keeping its operations running while it attempted to reorganize. These include software vendors as well as companies that provide security and storage for crypto assets. FTX originally asked the court to approve $9 million in supplier payments.

In a separate filing, FTX asked the court to approve a new cash management system. He said he had confirmed cash holdings of $565 million, but because he had only been able to verify the balances of 144 of his 216 known bank accounts, he “did not yet know the total amount of cash.” [it] hold[s]”.

FTX announced that the company has retained Perella Weinberg Partners as an investment banker to work alongside attorneys from Sullivan & Cromwell and consultants from Alvarez & Marsal.

Ray cited two US subsidiaries of FTX, Embed Clearing and LedgerX, as well as units in Japan, Turkey and the United Arab Emirates as attractive assets. The US arm of FTX purchased Embed Clearing, a provider of brokerage technology and infrastructure, in June. It acquired LedgerX, an American derivatives platform, last October.

In a court filing on Thursday, Ray detailed the chaos at the Bahamas-based FTX, describing a “complete failure of corporate controls and. . . a total absence of reliable financial information”.

Two other top cryptocurrency companies filed for bankruptcy this year, Voyager Digital and Celsius Holdings. Like FTX, each has attempted to reorganize or sell off rather than immediately seek liquidation. Voyager had signed an agreement to sell itself to FTX, but that is unlikely to materialize given FTX’s current issues.

Ray has pledged to investigate allegations of misconduct against Bankman-Fried and other executives.

Bankruptcy Court Judge John Dorsey will be called on Tuesday to intervene in a simmering fight between Ray and the Bahamas.

The island nation sought to retain jurisdiction over FTX Digital, an FTX subsidiary that is not among the entities that filed for bankruptcy in Delaware. FTX Digital is facing liquidation proceedings in the Bahamas.

FTX wrote in a court filing earlier this week that there was “credible evidence that the Bahamian government is responsible for directing unauthorized access to debtors’ systems for the purpose of obtaining debtors’ digital assets – that took place after the start of these [bankruptcy] case “.

In a statement released on Thursday, the Bahamas Securities Commission said that on November 12, it “made the decision to order the transfer of all digital assets of FTX Digital Markets Ltd to a digital wallet controlled by the Commission, for preservation purposes”.

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