LedgerX, a division of the bankrupt cryptocurrency exchange FTX, is reportedly getting ready to contribute $175 million to the bankruptcy proceedings of its parent company.
Company may release funds on Wednesday
According to a Bloomberg report that quoted people who know the situation, the derivatives trading platform will make the funds available as early as Wednesday.
The sources claim that the funds will come from a $250 million war chest that LedgerX had set aside to bid for approval to clear crypto derivatives trades without using third parties.
LedgerX formally withdrew the bid, deposited with the US Commodity Futures Trading Commission (CFTC), after FTX filed for bankruptcy on November 11.
A spokesman with the regulator said the CFTC was aware of the planned transfer.
CFTC keeping an eye on LedgerX
Two weeks ago, CFTC commissioner Kristin N. Johnson, indicated that the commission had “Boots on the ground” at LedgerX. According to Johnson, the CFTC monitored and oversaw operations at LedgerX daily to protect customer assets held on the platform.
LedgerX is one of the few FTX subsidiaries that have remained solvent following the collapse of the world’s second-largest crypto exchange. In September 2021, the company became part of Sam Bankman-Fried’s crypto empire after being acquired for an undisclosed amount. It was then placed under FTX.US, where it has operated as a regulated platform for users to trade crypto-based derivatives.
LedgerX still liquid despite FTX’s bankruptcy
A November 17 filing by new FTX CEO John J. Ray III showed that LedgerX was one of the most liquid entities in the broader FTX ecosystem, with more than $300 million on its books.
Since falling into bankruptcy, FTX and its former leader have become the subject of numerous lawsuits from investors and users of the platform. Only yesterday, another bankrupt crypto company, BlockFi, sued former FTX CEO Sam Bankman-Fried to get control of his shares in Robinhood, which he allegedly used as collateral for a loan from BlockFi.
When the company filed for chapter 11 bankruptcy protection, it indicated that it could have as many as 1 million creditors collectively owed more than $3 billion. New FTX chief executive John J. Ray III and his team of advisers have been going through the company’s books, searching for cash and crypto they can sell to help repay creditors. The transfer of the $175 million into FTX’s bankruptcy estate may be seen as a step in the right direction for the new leadership.