Bankrupt FTX crypto exchange requests to remove FTX Dubai from Chapter 11 proceedings

 

FTX in the USA, sent a motion dismissing Chapter 11 case for its Dubai’s operation regulated under Dubai’s virtual asset regulatory authority (VARA) in UAE. 

FTX VARA holds $4 million as security for the license of the total of $.45 million held by FTX Dubai in several accounts. As per Cointelegraph article, on July 25, VARA confirmed to FTX Dubai management that such restricted cash would be released in the context of the liquidation of FTX Dubai, according to United Arab Emirates law:

As stated in the motion, FTX Dubai established on February 11, 2022 under the laws of the United Arab Emirates to operate a crypto exchange. FTX Dubai is a direct, wholly-owned subsidiary of Debtor FTX Europe AG. Then on July 12, 2022, FTX Dubai was granted a virtual asset service provider license (the “License”) from Dubai’s Virtual Assets Regulatory Authority (“VARA”). Notwithstanding the grant of the License, FTX Dubai did not offer any crypto-related services to investors in the United Arab Emirates or operate a crypto exchange prior to the Petition Date. On November 10, 2022, VARA suspended the License and, on July 12, 2023, the License expired.”

FTX claims that given the absence of any historical business or resources to commence any business in the future, FTX Dubai has no reasonable likelihood of rehabilitating its operations. Additionally, FTX Dubai is balance sheet solvent. Therefore, the Debtors believe that a solvent voluntary liquidation procedure in accordance with the laws of the United Arab Emirates would allow a timely distribution of the positive cash balance after payment of all outstanding liabilities and liquidation of all assets. To the extent that any creditors filed claims against FTX Dubai in the Chapter 11 Cases, the dismissal of the Chapter 11 Case of FTX Dubai will not impact such claims and will not prejudice any creditor’s ability to pursue such claims directly against FTX Dubai in its local liquidation proceeding.

 

FTX adds, “  Accordingly, the Debtors believe it is in the best interests of the Debtors and their stakeholders to dismiss the Chapter 11 Case of FTX Dubai at this time.