LedgerX to Transfer $175 Million in Cryptocurrency to Parent Company Amidst Bankruptcy Proceedings
•FTX-owned derivatives trading platform LedgerX is reportedly preparing $175 million to be used in its parent firm’s bankruptcy proceedings.
• The platform, which operated as a subsidiary of FTX.US, provided a regulated way for users to trade derivatives based on cryptocurrencies such as Bitcoin and Ethereum.
• As per anonymous sources, the $175 million transfer could come as soon as Wednesday.
Ledger X comes to FTX aid
LedgerX, a cryptocurrency derivatives trading platform owned by financial technology firm FTX.US, is preparing to transfer $175 million to its parent company in order to help with its bankruptcy proceedings, anonymous sources have told Bloomberg.
The platform, which launched in 2014, provided a regulated way for users to trade derivatives based on Bitcoin and Ethereum. LedgerX only became part of the FTX fold relatively recently. The firm was first acquired in September 2021 for an undisclosed amount and then rebranded to FTX US Derivatives, following FTX’s $420 million fundraising involving 69 investors the same month.
If the transfer goes ahead as planned, it would be one of the largest bankruptcy infusions in crypto history. As per Bloomberg’s sources, the money would be used to repay creditors and cover other costs associated with the bankruptcy.
This news comes as a surprise amid the continued bear market for cryptocurrencies. It is unclear at this time whether or not LedgerX will resume operations following the transfer. The company has $303.4 million on its books making it the second-richest company under the FTX umbrella. There are other companies under the FTX umbrella that still remain somewhat solvent such as Alameda Research which still has $393.1 million, these amounts will probably be used to pay back users and investors.
Implications of the Transfer
The potential transfer of $175 million worth of cryptocurrency from LedgerX to FTX.US has far-reaching implications, both for the cryptocurrency industry and for the world of bankruptcy law.
For one this would provide a much-needed boost to confidence in cryptocurrencies, which have been struggling in recent months due to regulatory uncertainty and concerns about the reliability of other crypto exchanges and trading firms. Secondly, the use of cryptocurrency as a means of repayment in a bankruptcy proceeding sets a precedent that could have implications for future cases involving digital assets.
With FTX currently owing more than $3.1 billion, this probably will not be enough to save FTX.US from falling into insolvency, but it does provide a much-needed boost of confidence in crypto as a whole as many have begun to lose confidence or even belief in the ecosystem that was once seen as the future but is now seen as a sector replete with thieves, liars, and scandal
Various sources have stated that the influx may come as soon as this Wednesday November 30,2022. As stated earlier the amount offered by Ledger X is only a drop in the bucket to all of the users and companies that FTX owes. The bankruptcy procedure is already underway with many new revelations being discovered daily. With the situation being as dire as it is currently the future of crypto hangs in the balance, will the sector die out or will there be a new rebirth after the flames are quelled.