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Monex Group Eyes Purchase of FTX Japanese Crypto Exchange Subsidiary: Report

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Monex Group, a Japanese financial services company, is reportedly interested in purchasing the crypto exchange FTX Japanese subsidiary that is currently for sale, as stated by the CEO of the Tokyo-based brokerage.

FTX’s Japanese unit is being sold off as part of the US bankruptcy process for the company. Forty-one potential buyers have shown interest, with 25 entering into confidential agreements with the debtors, according to a court filing.

During an interview, as per Bloomberg’s report, Oki Matsumoto, the CEO of Monex, expressed general interest in the Japanese subsidiary of Sam Bankman-Fried’s FTX crypto exchange.

Although Matsumoto did not confirm if Monex is actively bidding for the business, he stated that a drop in the number of competing crypto exchanges would benefit the company.

Matsumoto sees potential for Japan’s crypto market as companies may start to invest in digital coins and utilize non-fungible tokens for marketing. In anticipation of this, Monex aims to be one of the “few choices” for customers by positioning itself in the market, said Matsumoto.

117 Parties Express Interest In FTX Subsidiaries

A court filing by investment bank Perella Weinberg reveals that approximately 117 parties have expressed interest in purchasing one or more of the subsidiaries of FTX, a cryptocurrency exchange. 

These subsidiaries include FTX Japan, FTX Europe, LedgerX, and Embed. Of the 117 interested parties, 59 have entered into confidentiality agreements with the debtors to access information for due diligence. However, no arrangements have been made as of yet.

As per the court filing, parties that meet the requirements of expressing interest, submitting satisfactory preliminary documents, and signing a confidentiality agreement will be given access to virtual data rooms made by PWP. The virtual data rooms include a management presentation and more information about the business operations, finances, and technology.

However, multiple parties have expressed interest in purchasing. In the Japanese subsidiary, 41 parties have shown interest, and 25 have entered into confidentiality agreements(PWP) with the debtors. Forty parties have expressed interest in the European subsidiary, and 23 have entered confidentiality agreements.

Additionally, 56 parties have expressed interest in the LedgerX subsidiary, with 32 entering confidentiality agreements. Finally, 50 parties have expressed interest in the Embed subsidiary, with 31 entering into confidentiality agreements.

Related Reading | Recent Bitcoin Price Rally Is Due to Market Manipulation, Says Ex-SEC Member 

FTX Seeks Court Approval To Dispose 4 Businesses

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In the annals of cryptocurrency history, 2022 will be remembered as the year of failures and bankruptcies. A number of well-known companies, including FTX, 3 Arrows Capital, Celsius, Terraform Labs, Voyager, and Vauld, as well as Genesis, and Alameda Research, have all bowed out. Investors had to face the weight of their breakdown, which shattered the entire crypto industry.

The United States Bankruptcy Court received a motion from FTX’s legal team on December 15 asking for authorization to sell the company’s European and Japanese operations, LedgerX derivatives exchange, and Embed stock-clearing platform.

The attorneys state that each of these companies has experienced regulatory pressure, which “merits[s] an expeditious sale process,” adding,

“The longer operations are suspended, the greater the risk to the value of the assets and the risk of a permanent revocation of licenses.”

FTX Japan’s operations suspended?

While FTX Europe had its activities and licenses suspended, the firm’s Japan branch is currently subject to business suspension and improvement orders.

They also point out the decline in clients and personnel the companies have seen since the firm declared bankruptcy on November 11 and contend that selling them now would enable a return to profitability and maximize value for the firm’s estate.

The attorneys claimed that because these companies were recently bought and had been operating mostly independently of FTX, selling them would be a lot simpler procedure.

If there are multiple interested parties, Embed would be the first business up for auction on February 21, 2023, followed by the other three the following month.

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The 134 companies involved in the bankruptcy procedures are claimed to be attractive to more than 110 parties, and the firm has already signed 26 confidentially agreements with parties interested in FTX’s businesses or assets.

Particularly during the firm’s bankruptcy proceedings, LedgerX has been hailed as a success story. Rostin Behnam, chairman of the Commodity Futures Trading Commission, noted that the company had essentially been “walled off” from other businesses within the FTX Group and “held more cash than all the other FTX debtor entities combined.”

FTX claims it is in the best interests of all stakeholders to sell off a portion of its bankrupt cryptocurrency enterprise before it loses too much of its value or has its licenses permanently revoked.

FTX Bankruptcy Procedures To Include $175 Million From LedgerX: Report

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LedgerX, a solvent company owned by FTX Group (which is bankrupt now), is getting ready to offer $175 million available to be used in FTX’s bankruptcy procedures, a person with knowledge of the matter told Bloomberg.

Bloomberg reported that the funds might be transferred by Wednesday. It will be paid for out of a $250 million fund that LedgerX set aside in an effort to get regulatory approval to clear cryptocurrency derivatives trades without mediators.

LedgerX is governed by the CFTC, which has knowledge of the intended transfer, according to a CFTC representative. However, representatives for both organizations did not respond to requests for comment.

An unexpected financial issue led to the demise of FTX Group earlier this month. According to reports, the exchange operator used user funds to support risky wagers made by Alameda Research, a subsidiary business, which ultimately led to the exchange’s collapse.

According to Bloomberg’s report, since the bankruptcy was declared, new Chief Executive Officer John J. Ray III and his team of advisers have been pouring through the company’s records to find the cash, cryptos, or other possessions they can sell to pay back their creditors.

Sam Bankman-Fried Explains FTX Collapse

The late Monday phone interview between Bankman-Fried and Axios comes while FTX is undergoing a complex bankruptcy procedure. Its creditors are unsure of “if anything, they will be able to recoup.”

When Sam Bankman-Fried last checked, he still had $100,000 in his bank account. The former CEO of FTX explained the collapse of his firm in an interview by citing both individual shortcomings and regulatory flaws.

“Bankman-Fried said regulation and proper oversight could have helped protect FTX from its collapse.” He believes that one thing that should be done is to examine the reporting and CFTC applications, both of which would have been very beneficial in this case regarding international rigor.

He made reference to the bankruptcy court accusation that he treated FTX like a personal domain and stated that there was definitely a point where he wished he hadn’t been in charge of handling conflicts of interest.

Furthermore, the former CEO of FTX stated :

I obviously deeply regret this. I’ve been focusing on volume, rather than positions for balances. I should have been more responsible, and I should have been more on top of what was going on.

Related Reading | Genesis Plays Hard Ball To Avert Bankruptcy

CFTC Gives LedgerX Thumbs Up To Clear Non-Crypto Products

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Even though the cryptocurrency industry was created to steer clear of regulators and the regulations they impose, almost every digital asset platform, in the present day is required to undergo scrutiny. The Commodity Futures Trading Commission [CFTC] is one such financial regulator that keeps several crypto platforms in check. As per the latest updates, the CFTC has given a green signal to, Bitcoin-based derivatives exchange, LedgerX to explore more than just cryptocurrencies.

Going Beyond Crypto

The United States’ based crypto platform, LedgerX LLC was granted permission to allow carry out clearing services for fully collateralized futures, options on futures as well as swaps.  CFTC shared the document pertaining to the amended order of the LedgerX.

The document pointed out that LedgerX had sought an amendment to its original registration as derivatives clearing organization back in 2017. In January 2020, LedgerX further requested the CFTC to expand the product scope to futures as well as options on futures.

More recently, on 23 June 2020, LedgerX requested the elimination of the digital asset limitation. On Wednesday, the Commission shared a post on its official website affirming the approval of the same. The post further read,

“Under the amended order, LedgerX is authorized to provide clearing services for fully-collateralized futures and options on futures in addition to the previously authorized swaps, and will no longer be limited to clearing digital currency products.”

Several members of Crypto Twitter acknowledged the platform’s latest achievement and even went on to laud it. LedgerX announced the same to its community via Twitter. The tweet read,

The founder and the CEO of LedgerX pointed out that the CFTC’s approval was a “major turning point” for the derivatives exchange.

Off-late several non-crypto platforms seem to have been taking an interest in crypto. More recently, the Singapore Exchange as well as the Vienna Stock Exchange extended their support towards crypto and listed Bitcoin and Ethereum. However, it seems like LedgerX intends to explore the non-crypto world.