FTX, the bankrupt crypto exchange, has taken legal action by filing a court motion to remove its Dubai unit from the ongoing restructuring proceedings in the United States.
Back in February 2022, FTX had set up its Dubai branch, which was owned by the company’s European arm, and this specific entity became part of the ongoing proceedings.
FTX Dubai was one of the 102 associated firms for which Chapter 11 cases were initiated when the exchange filed for bankruptcy last year.
However, in the latest court filing, the bankrupt exchange presented the argument that its Dubai unit had not conducted any business activities before the bankruptcy filing, raising doubts about its prospects for operational revival.
Related Reading: Regulating The Crypto Wild West: US Senators Urge Action Against Tax Evasion
To strengthen their plea, the firm’s legal representatives asserted that:
FTX Dubai is balance sheet solvent. Therefore, the Debtors believe that a solvent voluntary liquidation procedure in accordance with the laws of the United Arab Emirates would allow a timely distribution of the positive cash balance after payment of all outstanding liabilities and liquidation of all assets.
FTX Seeks Dubai Unit’s Exclusion For Debtors’ Safety
FTX Dubai, a wholly-owned subsidiary of the exchange’s European arm, holds a virtual asset service provider license issued by Dubai’s Virtual Assets Regulatory Authority (VARA). The company currently has approximately $4.5 million held across multiple accounts, with $4 million restricted as security for the license by VARA.
Lawyers argued that removing this entity from the proceedings was essential to safeguard the debtors and facilitate the payment of pre-bankruptcy wages, salaries, and employee expenses from Dubai.
Following this, the court hearing for this request has now been scheduled for August 23.
VARA previously confirmed on July 25 that the restricted cash would be released in accordance with United Arab Emirates law during the liquidation process of FTX Dubai.
“All of FTX Dubai’s assets are located in the United Arab Emirates and substantially all of FTX Dubai’s prepetition activities occurred in the United Arab Emirates, the Debtors have determined that a timely local voluntary liquidation of FTX Dubai in accordance with the laws of the United Arab Emirates is in the best interests of the Debtors and their estate,” the regulator said.
FTX 2.0 Launch to be Preceded by All Settlements
In a recent confirmation, the crypto exchange announced its intention to re-launch the exchange. John J. Ray III, the Chief Executive Officer and Chief Restructuring Officer of the exchange’s Debtors stated that their objective is to achieve a “consensual” plan and successfully emerge from bankruptcy.
According to the reported plan, the crypto exchange aims to convert international customers into owners of the exchange. Ray emphasized the commitment to addressing the matters in Q3 2023.
In Q4 2023, the company plans to submit an amended plan along with other relevant statements.
