FTX Gets Court Approval to Sell Crypto Holdings Worth $3.4 Billion

The judge overseeing FTX’s bankruptcy proceedings overruled two objections and approved the exchange’s motion to sell the crypto in its possession.

Bankrupt crypto exchange FTX is now free to sell or invest its crypto holdings to pay back creditors.           

In a court hearing on Wednesday, U.S. Bankruptcy Judge John Dorsey ruled that the exchange would be allowed to sell or hedge crypto assets, including Bitcoin (BTC) and Ethereum (ETH) and other insider-affiliated tokens. 

In approving the plan, the judge overruled two objections that cited potential disruption to the wider crypto market that could ensue from such a large selloff.

FTX will initially sell up to $50 million worth of its crypto holdings in the first week, and then offload up to $100 million in each of the subsequent weeks. If the exchange intends to increase the weekly limit to $200 million, it will seek written approval from the creditor committee, the ad hoc committee and the U.S. Trustee. 

The exchange amended the proposal earlier this week, stating that it would notify the Trustee of increases to the weekly limit on its sale of assets. 

The exchange has a total of $3.4 billion worth of cryptocurrencies, of which $1.16 billion is made up of Solana (SOL) and $560 million is in Bitcoin.

In its initial request seeking the court’s approval for the sales, FTX said that hedging its crypto assets would allow them to limit potential downside risk, and that staking certain digital assets would benefit creditors because it would generate low-risk returns on otherwise idle digital assets.

When Judge Dorsey asked whether FTX could tell who deposited the crypto, lawyers for the exchange said that the assets were “all in one pool” and could not be traced back to individual customers, according to a report from CoinDesk.