By
Mayowa Adebajo
April 11th, 2024
Earlier, FTX made a number of targeted acquisitions that established it as a market leader in the digital currency ecosystem.
Bankrupt digital currency trading and derivatives platform, FTX has filed a request with the Bankruptcy Court of Delaware to permit the bidding process for four of its solvent and independently operating subsidiaries. According to the court filing, the beleaguered company hopes to offload Embed Technologies, LedgerX LLC, FTX Japan, and FTX Europe over the next two months.
FTX filed for bankruptcy in early November after facing an excruciating liquidity crunch that pushed it to halt withdrawals. The filing for bankruptcy impacted all of its 100 subsidiaries including FTX US and Alameda Research. One of the first claims made by John Ray III after he was named the new Chief Executive Officer of the firm post-bankruptcy was that it was not all of the exchange’s subsidiaries that were distressed.
Up until now, FTX said it has been receiving a number of unsolicited bids from interested firms that will like to buy up the named entities. The company revealed in the filing that if permission was not given by the court to sell off these entities, their valuations may be impacted dramatically following the suspension of operations.
“The licenses held by FTX Europe have been suspended, and FTX Japan is subjected to suspension,” read the motion. “The longer operations are suspended, the greater the risk to the value of assets and the risk of permanent revocation of licenses.”
The funds realized from these sales will be deployed toward compensating its creditors which FTX claims it is owing billions of dollars.
Independent Operations Stirred Healthy Balance Sheets
While at its peak, FTX Derivatives Exchange made a number of targeted acquisitions that established it as a market leader in the digital currency ecosystem. Some of these acquisitions come with an agreement of independent operations, a clause that has helped all of these subsidiaries to be shielded from the liquidity challenges of the parent company.
Embed Technologies operates a clearing and custody service for financial services providers as well as broker-dealers. Embed Technologies is regulated by the United States Securities and Exchange Commission (SEC) as a FINRA-registered broker-dealer.
One of the subsidiaries, LedgerX is regulated by the Commodity Futures and Trading Commission (CFTC) and it offers a derivatives exchange platform for clients in the US. FTX Japan Holdings also operates independently and in itself, it has two other functional subsidiaries including FTX Japan and FTX Singapore.
According to the filing, the company is interested in selling either FTX Japan Holdings as a whole or 100% of the constituent subsidiaries.
“FTX is soliciting bids for a sale of 100% interest in FTX Japan Holdings or separate sales of 100% interest in FTX Japan and FTX Singapore,” it said.
The filing revealed different proposed bidding dates for each of these companies including January 18 for Embed Technologies, Jan 25 for LedgerX, and February 1 for FTX Europe, the exchange’s equity derivatives platform with its base in Switzerland.