FTX files motion to exclude its Dubai unit from bankruptcy proceedings

Bankrupt crypto exchange FTX filed a motion in court to remove its Dubai unit from the ongoing restructuring proceedings in the United States.

In a court filing on Aug. 2, the crypto exchange argued that its FTX Dubai unit didn’t conduct any business prior to the bankruptcy filing, thus the subsidy has no likelihood of rehabilitating its operations. The court will start its first hearing on the issue on Aug. 23.

The crypto exchange in its filing noted that FTX Dubai is balance sheet solvent and therefore a 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.”

FTX Dubai is a direct, wholly-owned subsidiary of FTX’s European arm which obtained a virtual asset service provider license from Dubai’s Virtual Assets Regulatory Authority (VARA). FTX Dubai currently holds approximately $4.5 million in several accounts, of which $4 million is presently restricted by VARA as security for the License.

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.

“All of FTX Dubai’s assets are located in the United Arab Emirates and substantially all of FTX Dubai’s prepetition activities occurred in the United Arab Emirates, the Debtors have determined that a timely local voluntary liquidation of FTX Dubai in accordance with the laws of the United Arab Emirates is in the best interests of the Debtors and their estate,” the filing noted.

Related: The FTX contagion: Which companies were affected by the FTX collapse?

FTX Dubai is expected to enter into an agreement with the appointed liquidator to implement basic administrative procedures and promote the orderly and efficient administration of the liquidation.

FTX filed for bankruptcy on November 11 last year and the exchange started the bankruptcy proceedings for 102 associated entities from around the world.

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