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The implosion of one of the top crypto exchanges, FTX, in 2022 created a crisis in the crypto industry. Many firms with exposure to the exchange were affected, while some of the subsidiary arms of FTX lost massively.
One of the Sam Bankman-Fried’s (SBF) firms that felt the impact was the crypto derivatives platform LedgerX LLC. In a recent development, FTX is set to sell the platform for $50 million.
The Sale Of LedgerX To M7 Holdings
The FTX debtors announced the sale of the crypto derivatives LedgerX LLC. According to the report from Cision PR Newswire on April 25, the sale is set at $50 million and to a Miami International Holdings, Inc (MIH) affiliate, M7 Holdings, LLC.
The FTX CEO and Chief Restructuring Officer, John J. Ray III, disclosed the sale agreement between the two parties. Ray mentioned that the sale indicates the ongoing efforts from the exchange to monetize assets for the stakeholders.
There are still customary closing conditions for the sale of the platform. The process will include approval from the Judge in the US Bankruptcy Court. A sale hearing has been slated on May 4, 2023.
According to the former schedule, the LedgerX sale was in March 2023 but later shifted to April 2023. In October 2021, FTX US previously purchased LedgerX for an unknown amount. The firm also started crypto derivative trade with US customers after the acquisition.
At the beginning of this year, the FTX exchange got approval to sell some of its affiliated businesses and firms, including LedgerX. Other businesses are FTX Japan, FTX Europe, and Embed Business.
The sales were meant to occur while the business subsidiaries still had value. They will generate funds that will help the exchange repay its creditors.
The FTX Bankruptcy lawyers stated that the approved businesses for sale had solvent balance sheets. Also, they mentioned that the firms maintained independent management outside the FTX exchange and had valuable franchises.
During the period, FTX noted that more than 100 companies were interested in acquiring some of the businesses.
LedgerX And M7 Holdings
LedgerX is a crypto derivatives platform that offers different products, such as Bitcoin futures, options, and swaps. Also, it provides users with Ethereum options and swaps. Both institutional and individual investors can use the platform for trades.
Additionally, LedgerX functions as a clearinghouse with CFTC authorization. The firm can clear collateralized futures, options on futures, commodities, and swaps.
The platform was launched in 2014 and came under the regulation of the US Commodities and Futures Trading Commission (CFTC) in 2017. It is headquartered in Miami, with many users from within and outside the US.
With M7 Holding’s acquisition of LedgerX, the former is expected to scale its field of crypto derivatives higher. The parent firm, Miami International Holdings (MIH), operates a derivatives-focused platform, Miami International Securities Exchange (MIAX).
M7 Holdings is a global investment company with wide exposure to different fields. These include private equity investments and acquisitions, real estate development, venture capital, operations management, etc.
In 2022, MIAX partnered with Lukka, a crypto data provider, to develop and launch some crypto derivatives. While MIAX provides the crypto platform, Lukka supplies crypto data to strengthen the operation. With the inclusion of LedgerX, MIAX will experience a better output in its derivatives services.
FTX Implosion And Moves Toward Recovering
The FTX exchange suffered a sudden liquidation due to massive withdrawals from investors that ran into billions of dollars. Also, its rival exchange, Binance, pulled back on a rescue deal for some reasons causing the final blow on FTX.
FTX, founder Sam Bankman-Fried, and some executives were implicated in fraud charges, arrested, and prosecuted. This allegation came from the roles they played in the running and collapse of the exchange.
Some executives have already pleaded guilty and pledged their willingness to cooperate with prosecutors. However, SBF maintained that he was innocent of all the fraudulent activities in the company.
After its dramatic crash, FTX filed for Chapter 11 bankruptcy protection in the US court in November 2022. The exchange is estimated to have over one million creditors, with a debt of more than $3 billion for the top 50 creditors.
The FTX crypto exchange stated that it is making more efforts to outline a repayment schedule for its customers and creditors. This may have to do with restarting the crypto exchange or its sale to achieve the dream.
According to a report from Reuters on April 12, FTX claimed to have recovered more than $7.3 billion in cash and liquid crypto assets. The exchange attorney Andy Dietderich mentioned the recovery early this month.
Also, FTX has been selling some of its assets to offset its debts. Recently, the crypto exchange decided to sell its stake in Web3-focused startup Mysten Labs for $95 million.
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