A group of FTX clients have raised limited objection to FTX’s plan to sell four independently operated subsidiaries, arguing that they should be aware of the sale process to ensure clients’ interests are represented.
The group has also raised concerns that “embezzled customer funds” may have been used to acquire or keep these companies in operation.
The limited objection was filed on December 4 by an 18-member ad hoc committee of non-US clients. who together have claims against FTX for more than USD 1.9 billion.
In his presentation, the committee argued that previous public statements by FTX, the Securities and Exchange Commission, and the Commodity Futures Trading Commission make it clear that client assets on the platform belong to clients and not to FTX.
The Commission expressed its “great concern about the lack of information on the sale of the companies” and also questioned that these were “necessary for a possible restart” of FTX.
A limited objection is similar to an objection, except that it only applies to a specific part of the proceeding. In this case, the limited objection is due to the exclusion of the ad hoc committee from the sales process.
Ad Hoc Committee is the first I’ve seen mention of a potential FTX restart to the court – one of the reasons they list for filing they limited objection to FTX’s planned sales of solvent subunits. pic.twitter.com/7TCW3WwRm0
— FTX Creditor (@AFTXcreditor) January 5, 2023
The Ad Hoc Committee is the first I’ve seen mention a possible FTX restart to the court, one of the reasons they list for filing their limited objection to FTX’s anticipated sales of creditworthy subunits.
The committee has asked the judge to allow them to act as “consulting professionals” in order to ensure that clients’ interests are represented throughout the bidding process, adding:
“The Ad Hoc Committee does not intend to interfere with the value-maximizing transactions that Debtors may carry out, as long as the interests of FTX.com clients are protected.”
Under the proposed bidding procedures, only consulting professionals will be allowed to attend the auction and consult with FTX on issues related to the sale process, and the committee notes that consulting parties have no control of the process outside of being able to provide advice.
On December 15, FTX had applied to the bankruptcy court to allow it to sell its European and Japanese subsidiaries, as well as derivatives exchange LedgerX and securities clearing platform Embed.
LedgerX in particular has been hailed as a success story during bankruptcy proceedings.; Commodity Futures Trading Commission Chairman Rostin Behnam noted that the firm had been essentially “walled off” from other companies within the FTX Group, and “had more cash than all other FTX debtor entities combined.”
Last week, the same commission called for client names and private information to be removed from court documents.suggesting that customers could be exposed to identity theft, targeted attacks and “other harm.”
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