On Thursday, May 5th, 2023, U.S. Bankruptcy Judge John Dorsey approved the sale of LedgerX, a non-bankrupt crypto derivatives trading platform owned by FTX, to an affiliate of Miami International Holdings. This private equity firm owns several U.S.-registered securities exchanges, including the Miami International Securities Exchange and the Bermuda Stock Exchange. The sale was made at a loss of 83%, as the purchase price was $50 million, while FTX had bought LedgerX for nearly $300 million in August 2021.
The sale of LedgerX is part of FTX’s efforts to repay its creditors, including customers, after filing for Chapter 11 bankruptcy in November 2022. FTX is attempting to repay an estimated $11 billion to customers through a combination of asset sales and clawback actions. Since filing for bankruptcy, FTX has recovered more than $7.3 billion in cash and liquid crypto assets, according to the company’s report in April.
As part of its broader efforts, FTX announced on Wednesday, May 3rd, that it would seek repayment of nearly $4 billion from Genesis Global Capital (GGC), the bankrupt lending arm of crypto firm Genesis. FTX claimed in a court filing that Genesis owes it that money as a result of transactions that took place shortly before FTX’s bankruptcy filing. Under U.S. bankruptcy law, debtors can try to claw back payments made in the 90 days before a bankruptcy filing so that those funds can be more equitably distributed among creditors.
Genesis was the primary “feeder fund” for FTX-affiliated hedge fund Alameda Research, loaning Alameda crypto assets that it used for further loans and investments, according to FTX. At one point, Alameda held $8 billion in loans provided by Genesis, according to FTX. Genesis, unlike other creditors, was largely repaid before FTX went bankrupt.
FTX’s Bankruptcy Impact
FTX’s bankruptcy and subsequent legal proceedings have been highly publicized and scrutinized, as the company’s founder, Sam Bankman-Fried, has been indicted on fraud charges for his role in the company’s collapse. He has pleaded not guilty, while former members of his inner circle have pleaded guilty and agreed to cooperate with prosecutors.
Companies in the crypto lending industry were highly intertwined during a turbulent 2022 that saw many tumbles into bankruptcy. FTX, a once-prominent crypto exchange, filed for Chapter 11 amid allegations that Bankman-Fried used FTX customers’ money to prop up Alameda’s balance sheet.
LedgerX was one of the few FTX entities that remained solvent following the bankruptcy proceedings. The CFTC-regulated trading platform allows people to buy, sell, and bet on the future price of digital assets. The sale of LedgerX to Miami International Holdings will help reimburse former clients who lost money in FTX’s collapse.
How to Protect Yourself from Losing Crypto?
Protecting yourself from fake and fraudulent cryptocurrency exchanges is crucial, as there are many scams out there trying to take advantage of unsuspecting investors. Here are some tips to help you stay safe:
- Before investing in any cryptocurrency exchange, make sure to research it thoroughly. Look for reviews from reputable sources, check if the exchange is licensed and regulated, and ensure the team behind it is credible and experienced.
- Your private keys are your access to your cryptocurrency funds. Keep them safe and secure by storing them in a secure wallet. Avoid sharing your private keys with anyone, and never give them out to anyone who claims to be from an exchange.
- Enabling 2FA adds an extra layer of security to your account. Requiring a code sent to your phone or email in addition to your password makes it much harder for hackers to access your account.
- Phishing scams are a common way for hackers to gain access to your exchange account. They often involve fake emails or websites that look like they’re from a legitimate exchange, but they’re actually designed to steal your login credentials. Always double-check the URL of the exchange website before entering your login information, and never click on links in unsolicited emails.
- Regularly check your exchange account for any unusual activity, such as unauthorized withdrawals or trades. If you notice anything suspicious, contact the exchange immediately and take steps to secure your account.
In addition to these tips, it’s important to remember that cryptocurrency investing comes with risks. Always invest only what you can afford to lose, and be aware that the cryptocurrency market is volatile and can fluctuate rapidly.
And if you experience any trouble, contact our digital coin experts for assistance with tracking and tracing crypto through CipherTrace software.
