The defunct crypto exchange FTX plans to remove its Dubai branch from the US bankruptcy proceedings. The firm revealed the intention in a court filing on Thursday, August 3, 2023. The hearing is slated for August 23.
Recent Dismissal Filing Argues About Debtors Protection
FTX’s bankruptcy filing in the United States in November 2022 initiated Chapter 11 cases covering 102 associated global entities.
Though launched on February 2022, FTX Dubai was included among the entities covered by the proceedings. However, FTX Dubai did not complete any business transactions in the United Arab Emirates before the bankruptcy filing.
The recent filing for the dismissal of the Dubai unit uses its no-business transaction state as a formidable argument. The bankrupt estate debated that the unit lacked the potential to revive operations.
The filing stated: “Additionally, FTX Dubai is a 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.”
Further, the estate maintains that all court orders while FTX Dubai was included in the bankruptcy proceedings would still be viable.
However, the call for removing the unit is an important move in protecting the debtors and authorizing their payments for pre-bankruptcy wages and salaries.
Additionally, the filing argues that the dismissal would aid in completing other packages for the Dubai employees. These include their compensation, benefits, and expenses.
FTX Dubai Ownership and Operations
FTX’s European subsidiary fully owns FTX Dubai. The Dubai Virtual Asset Regulatory Authority (VARA) approved a virtual asset service provider license for the unit.
The unit has almost $4.5 million worth of assets in different accounts, with $4 million under restriction by VARA as security for the firm’s license.
The Dubai regulator stated last month that releasing the company’s restricted money would be in the context of FTX Dubai liquidation. The regulator cited the relevant United Arab Emirates law on the issue.
According to VARA, all of FTX Dubai’s assets are located in the country, and most of the firm’s activities also occur there. So, the Debtors decided that a prompt and voluntary liquidation of the unit locally would follow the rules of the United Arab Emirates.
The regulator noted that such a move would favor the Debtors and their estate.
Following the recent plan for its liquidation, FTX Dubai is expected to start a discussion with the selected liquidator to reach an agreement. The target is to implement basic administrative processes and to enhance the orderliness and effectiveness of the liquidation.
