Sale of FTX Subsidiaries Challenged by US Trustee as Execs Seek to Recover Millions Donated
- United States Trustee recently challenged the plans of FTX to sell its digital currency and clearinghouse LedgerX, along with other subsidiaries.
- Trustee Andrew Vara called for an independent investigation before any sale.
- The new management of aims to sell divisions in Japan and Europe along with LedgerX and the stock-clearing platform Embed.
- “A number of recipients of contributions or other payments” have contacted FTX to return the funds that it had donated.
The problems associated with crypto exchange FTX do not seem to end, as the United States Trustee recently challenged the plans of the once-leading crypto exchange platform to sell its digital currency and clearinghouse LedgerX, along with those of other businesses.
According to a recent report by Reuters, on January 7, U.S. Trustee Andrew Vara called for an independent investigation before any sale. As per the filing, Vara believes that this would prevent any valuable information related to FTX’s bankruptcy from being compromised. The document states:
“The sale of potentially valuable causes of action against the Debtors’ directors, officers and employees, or any other person or entity, should not be permitted until there has been a full and independent investigation into all persons and entities that may have been involved in any malfeasance, negligence or other actionable conduct.”
The new management of the once-leading crypto exchange intended to sell its divisions in Japan and Europe, as well as the derivatives exchange LedgerX and the stock-clearing platform Embed, in an effort to recoup lost funds from its users.
Notably, a December 15 filing reveals that FTX lawyers argued that selling these entities would maximize value to the FTX state. Moreover, they also believed that since they had recently been acquired and were running independently of FTX, the sale of these entities would be much simpler.
It was expected for the company’s auctions to begin the sale with Embed in February and continue with the other three auctions in March.
New FTX Management has New Plans
FTX, which was once the biggest rival of Binance, filed for bankruptcy in November last year. According to a report by the Wall Street Journal, the exchange’s new management is recently planning to recover millions of dollars in donations made by the exchange and its former CEO Sam Bankman-Fried.
In September last year, FTX’s charity unit, Future Fund, committed over $160 million to more than 110 nonprofit organizations, including university researchers and biotech startups committed to developing COVID-19 vaccines as well as nonprofit organizations in India, China, and Brazil.
Future Fund committed $5 million to Atlas Fellowship for scholarships and high-school summer programs and another $3.6 million to AVECRIS, a company creating a genetic vaccine platform.
A representative of the company stated that trading profits, not user deposits, were used to fund charity donations. In February 2022, Future Fund announced its plans to deploy more than $100 million in its first year and surpass up to $1 billion in donations.
Prosecutors in the United States are also looking into FTX’s donations to political parties and candidates. Interestingly, with contributions totaling $5.2 million, Bankman-Fried was the second-largest “CEO contributor” to Joe Biden’s 2020 campaign.
Businesses and investors may be obligated to repay billions of dollars donated in the months before the FTX collapse. According to FTX’s new management, “a number of recipients of contributions or other payments” have contacted the company to return the funds.
A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.
