FTX Clients Want To Know More About Its Subsidiary Sales Strategy

Although the 18 consumers do not wish to stop the transactions, they contend they must be involved to guarantee that their interests are represented.

To guarantee that their interests are reflected, a group of FTX customers contends that they should be included in the sales process. This group has filed a limited objection to FTX’s intention to sell four separately run companies.

The organization has expressed worry over the possibility that “misappropriated customer funds” were used to buy or maintain these businesses.

An ad hoc committee of non-U.S. consumers, consisting of 18 members, who have combined claims against FTX totalling more than $1.9 billion, submitted the limited objection on December 4.

The committee said in its petition that prior public declarations made by FTX, the Securities and Exchange Commission, and the Commodity Futures Trading Commission make it abundantly evident that consumers, not FTX own the client assets on the platform.

It claimed that the absence of information on the sale of the firms had raised “serious concerns,” and it was also questioned if the businesses may be “significant to a potential restart” of FTX.

Like an objection, a restricted complaint pertains to a particular aspect of the proceedings. The limited complaint, in this case, results from the ad hoc committee’s absence from the selling procedure.

To guarantee that consumers’ interests are reflected throughout the bidding process, the committee has requested that the judge grant them the right to act as “consulting professionals,” adding:

“The Ad Hoc Committee does not seek to stand in the way of value-maximizing transactions that the Debtors may pursue, so long as the interests of FTX.com customers are protected.”

The committee emphasizes that the consultation parties have no authority over the process other than the ability to give guidance and that only consulting experts will be permitted to attend the auction and confer with FTX on issues relevant to the sale process.

On December 15, FTX requested permission from the bankruptcy court to sell its European and Japanese subsidiaries, the derivatives exchange LedgerX and the stock-clearing platform Embed.

In particular, LedgerX has received praise for performing well during the bankruptcy proceedings. Rostin Behnam, chairman of the Commodity Futures Trading Commission, noted that the company had essentially been “walled off” from other businesses within the FTX Group and “held more cash than all the other FTX debtor entities combined.”

The same committee requested last week that consumers’ names and private information be removed from court records, claiming that doing so might expose customers to identity theft, targeted attacks, and “other injury.”