Bankrupt cryptocurrency exchange FTX has filed a motion to exclude its Dubai unit from the ongoing bankruptcy proceedings in the United States. FTX Dubai, which was established in February 2022, failed to conduct any business activities in the United Arab Emirates (UAE) before the global entity filed for bankruptcy. The unit also did not offer any crypto-related services in the UAE after securing a virtual asset service provider license, which was later suspended and expired. FTX believes that the Dubai arm should be excluded from the bankruptcy proceedings and undergo a solvent voluntary procedure instead. This would allow for the distribution of a positive cash balance and the settlement of outstanding liabilities under UAE laws.
At the time of the filing, FTX Dubai held approximately $4.5 million in its accounts. However, $4 million of these funds have been restricted by Dubai’s Virtual Assets Regulatory Authority (VARA) as security for the license. FTX stated that dismissing the Dubai unit from the bankruptcy proceedings would not affect creditors’ claims against the exchange. Creditors would still be able to pursue their claims during the voluntary liquidation proceedings under UAE laws. FTX expects FTX Dubai to enter into an agreement with the appointed liquidator to facilitate the orderly and efficient administration of the liquidation.
Meanwhile, FTX is planning to restart its operations, focusing solely on offshore customers and excluding investors in the United States. This move suggests a strategic shift in FTX’s business approach as it seeks to navigate the challenges posed by the bankruptcy proceedings. By excluding the Dubai unit and targeting offshore customers, FTX aims to reestablish its operations and regain stability in the cryptocurrency market.
Overall, FTX’s motion to exclude its Dubai unit from the U.S. bankruptcy proceedings reflects the company’s efforts to streamline its operations and protect the interests of its creditors. As the cryptocurrency exchange works towards resolving its financial challenges, it remains to be seen how this decision will impact FTX’s future plans and its position in the global crypto industry.
