FTX’s motion to sell digital assets draws U.S. trustee objection

By Sarah Lizee

Olympia, Wash., Sept. 8 – FTX Trading Ltd.’s motion to sell or transfer certain digital assets drew an objection from U.S. trustee for Regions 3 and 9, Andrew R. Vara, according to documents filed Thursday with the U.S. Bankruptcy Court for the District of Delaware.

The assets include digital assets that are in or attributed to customer accounts.

Through the motion, FTX seeks approval of management and monetization guidelines relating to the sale or transfer of certain digital assets; the sale or transfer of digital assets in line with the guidelines free and clear of any liens, claims, interest or encumbrances; the debtors’ entry into post-petition hedging arrangements, including granting liens and superiority administrative expense claims; and the staking of certain digital assets by the debtors.

The U.S. trustee said he objects to the motion to the extent that it seeks to grant post-petition liens on unidentified property, including unencumbered property, and super-priority administrative expense claims in unspecified amounts in connection with financing to be provided by unnamed counterparties in hedging transactions relating to cryptocurrency.

Vara said he also objects to certain aspects of the management and monetization guidelines relating to the debtors’ sale of cryptocurrency, which fail to provide notice of or an opportunity to object to potential changes to the amount and type of cryptocurrency that may be sold to any party in interest other than the official committee of unsecured creditors or the ad hoc committee.

FTX has headquarters in the Bahamas and filed Chapter 11 bankruptcy on Nov. 11, 2022 under case number 22-11068.

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