FTX bankruptcy judge approves sale of LedgerX

The judge presiding over crypto exchange FTX’s bankruptcy case has given the green light to a motion allowing the sale of LedgerX.

In a May 4 hearing in the United States Bankruptcy Court for the District of Delaware, Judge John Dorsey approved a motion the FTX debtors filed in April to sell LedgerX to M7 Holdings, an affiliate of Miami International Holdings. FTX said at the time of the purchase agreement that the total proceeds of the transaction would total roughly $50 million.

According to lawyers speaking at the hearing, there were no objections to the sale of LedgerX. A representative who spoke on behalf of OKC USA Holding – one of the other bidders for LedgerX – largely did not object to the proceedings but said the firm “reserve[s] all of their rights to seek appropriate relief” relating to a declaration filed by Bruce Mendelsohn, a partner for the FTX debtors’ investment banker. The lawyer claimed Mendelsohn made “not true” statements in regard to OKC’s regulatory obligations to the Commodity Futures Trading Commission (CFTC) and the U.S. government.

“Well, that was easy,” said Dorsey, in reference to the brief hearing. The judge said he had read all the papers and declarations related to the motion and was “satisfied” with the proceedings.

The court ruling represented a step forward in FTX’s bankruptcy case and the potential for investors to be made whole following the firm filing for Chapter 11 in November 2022. The bankruptcy court approved the sale of certain FTX entities in January as part of the proceedings.

FTX.US purchased LedgerX in August 2021. During a congressional hearing exploring the collapse of the crypto exchange, CFTC Chairman Rostin Behnam said that LedgerX was “healthy,” “solvent,” and “operational” compared to other FTX entities.

The bankruptcy court has yet to make a ruling on a motion from several media outlets requesting it release the identities of certain FTX customers. Opponents of the motion have suggested that not allowing certain personal information to be redacted could make individuals the targets of scammers and bad actors.

Related: FTX seeks to claw back $4B from Genesis in a battle of the bankrupt

In criminal court, former FTX CEO Sam Bankman-Fried, or “SBF,” awaits his October trial. He faces charges including allegedly moving FTX customer funds through Alameda Research and violations of campaign finance laws. As of March, SBF was barred from using online messaging apps as part of his bail conditions. At the time of publication, he was largely confined to his parents’ California home.

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