FTX, the struggling crypto exchange, is seeking to remove its Dubai unit from the U.S. bankruptcy proceedings, according to court documents filed on Thursday.
The company believes that liquidating FTX Dubai under UAE law would allow for the prompt distribution of any outstanding liabilities.
FTX filed for bankruptcy in the U.S. last November, involving 102 entities worldwide, including FTX Dubai, established in February 2022 and owned by the European arm of the company.
The collapse of the crypto fine affected the crypto industry with firms such as Genesis, Galaxy Digital, Sequoia Capital, Galois Capital, BlockFi, Crypto.com, Wintermute, Multicoin Capital, and more announcing losses in millions of dollars.
In addition, the founder, Sam Bankman-Fried, has been arrested and faces charges that could lead him to jail if found guilty. On the other side, a team of administrators have taken over the first led by John Ray III as the new CEO.
FTX Dubai not part of business activities before bankruptcy
The request for exemption of FTX Dubai is argued on the fact that FTX Dubai did not engage in any business activities prior to the bankruptcy filing in the United Arab Emirates, making rehabilitation unlikely.
FTX further asserts that the Dubai unit is balance sheet solvent, making a voluntary liquidation procedure in accordance with UAE laws a viable option for timely distribution of cash balance and outstanding liabilities settlement. The court hearing on this matter is scheduled for Aug. 23.
Also, another recent request by FTX is in connection with compensating its users who had funds in the crypto exchange before it was declared bankrupt. These include FTX.com and FTX.US.
According to FTX, there is a consideration to have FTX reopened offshore, outside the US, and while this happens, affected users will either be given their funds back or they can choose to exchange they cash back for stake in the planned new FTX.
All of these decisions and recommendations are still in court and will be cleared as the proceedings continue.
