The CFTC Chairman Rostin Behnam is set to appear before a US Senate Committee Hearing on Thursday to testify about the now-bankrupt FTX trading platform.
LedgerX, the clearing startup that was acquired by FTX US and rebranded as FTX US Derivatives, is set to free up as much as $175 million for use in the ongoing bankruptcy proceedings of the company. According to a Bloomberg report citing people familiar with the matter, the money will be freed up as a part of the $250 million it had set aside to use in clearing crypto derivatives products had it gotten the regulatory nod.
The firm is one of the few subsidiaries of FTX Derivatives Exchange that is solvent but it had to also file for bankruptcy alongside the parent company on October 11. With the filing, the startup reportedly withdrew its application with the Commodity Futures Trading Commission (CFTC) with respect to its plans to become a self-sustaining clearing house.
With the application withdrawal, enough cash is now available and according to the report, the funds may still be used to pay creditors in the end. When the implosion of the FTX business empire became known to the general public and new Chief Executive Officer (CEO), John Ray III took over, he revealed that there are a number of profitable businesses in FTX.
Since his assumption into the office to date, John and the rest of the advisers handling the FTX’s books post-bankruptcy have been in search of all forms of cash through bank balances and digital assets that can be sold and added to the deficient fund pool for creditors who so much want to recoup their funds.
That the FTX group of companies was mismanaged is an understatement, however, the $175 million from LedgerX is an encouragement that with more probes, some of the entities tied to FTX may also send in preserved cash.
CFTC Aware of LedgerX and FTX’s Plans to Free Up $175M
According to the Bloomberg report, the planned transfer of the $175 million cash is following laid regulations. As a regulator to LedgerX, the CFTC said it is aware of a planned transfer of funds from the clearing outfit according to a spokesperson.
In search of answers on why FTX had to crash in the way it did, American lawmakers as well as their counterparts in other parts of the world are opening inquiries and investigations into the collapsed trading behemoth. Notably, the CFTC Chairman Rostin Behnam is set to appear before a US Senate Committee Hearing on Thursday to testify about the now-bankrupt FTX trading platform.
More hearings like this are bound to increase over time in the search for answers. While the Federal lawmakers and regulators are grilling the operators of the collapsed trading firm, states-wide inquiries are also underway considering the spread of the close to 1 million creditors the company said it is owing. With a cash balance of $1.24 billion, FTX will be reducing the deficit of a total of $3.1 billion it owes its top 50 creditors.
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