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The bankrupt cryptocurrency exchange FTX has submitted a motion to exclude its Dubai subsidiary from the current bankruptcy proceedings in the United States.
A document filed with the U.S. Bankruptcy Court for the District of Delaware indicates that FTX Dubai did not engage in any business activities within the United Arab Emirates (UAE) prior to the global entity’s bankruptcy filing and is unlikely to restart its operations.
Excluding FTX Dubai From Bankruptcy Proceedings
FTX Europe launched the Dubai crypto exchange in February 2022. Five months later, the unit obtained a virtual asset service provider license from Dubai’s Virtual Assets Regulatory Authority (VARA).
After receiving VARA’s approval, FTX Dubai did not provide any crypto-related services in the UAE until the agency suspended the license in November 2022, which subsequently expired in July 2023.
“Due to the lack of any historical business or resources to initiate future operations, FTX Dubai has no reasonable chance of reviving its activities. Furthermore, FTX Dubai is solvent on its balance sheet,” stated FTX.
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Consequently, FTX asserts that the Dubai branch should be removed from its bankruptcy proceedings and instead undergo a solvent voluntary process. This would facilitate the distribution of a positive cash balance after settling outstanding liabilities and liquidating assets in accordance with UAE regulations.
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Creditors to Pursue Their Claims
At the time of the filing, FTX Dubai had around $4.5 million in its accounts. VARA has frozen $4 million of these funds as security for the license, intending to release the cash once the entity begins its liquidation process.
FTX emphasized that removing the Dubai unit from the bankruptcy proceedings would not impact creditors’ claims against the exchange, as they could pursue these claims during the voluntary liquidation process under UAE laws.
“To safeguard the rights and claims of the Debtors in the context of the liquidation of FTX Dubai, it is anticipated that FTX Dubai will enter into an agreement with the appointed liquidator to implement essential administrative procedures to align and coordinate the activities of the liquidator of FTX Dubai and facilitate the orderly and efficient management of the liquidation,” the exchange added.
In the meantime, FTX is seeking to resume its operations with plans to serve only offshore customers and not investors based in the U.S.
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