FTX won court approval for a controlled sale of its crypto holdings

The U.S. Bankruptcy Court for the District of Delaware authorized FTX’s Chapter 11 debtors on September 13, 2023, to sell and transfer specified digital assets under court-approved guidelines. Judge John T. Dorsey’s order also permitted defined hedging arrangements and staking. It was a consequential shift from locating the collapsed exchange’s assets to managing and monetizing them for an eventual bankruptcy distribution.

The ruling did not order a one-day liquidation, approve an unrestricted sale of the entire portfolio, or determine what customers would recover. It authorized transactions subject to an investment manager, weekly limits, notice rules and continuing creditor oversight. That distinction mattered because the estate’s own September 11 materials valued its digital-asset holdings at about $3.4 billion as of August 31, 2023, while traders were already debating whether sales could pressure token markets.

A controlled path to cash

For most covered tokens, the order set a $50 million aggregate sale limit for the calendar week in which it was entered and, because it came on a Wednesday, the following calendar week as well. The ordinary ceiling then became $100 million per calendar week. The debtors could obtain a temporary increase with prior written approval from the official creditors’ committee and the ad hoc customer committee, while a permanent increase to $200 million required another court order.

The weekly calculation excluded bitcoin and ether. It also excluded stablecoin sales or redemptions for fiat and transactions used to bridge assets back to their native blockchains. Bitcoin, ether and certain insider-affiliated tokens instead received separate treatment: sales had to run through an investment manager, with ten business days’ prior written notice to the two committees and the U.S. Trustee. An unresolved objection could return the proposed sale to the court. FTT, the exchange token associated with FTX, could not be sold without additional authorization.

The court separately allowed the estate to use calls and puts for eligible hedging assets, initially bitcoin and ether, and to stake certain assets through qualified custodians using private validators when the debtors judged that course to be in the estates’ interests. Monthly and biweekly reporting requirements, plus early weekly status calls with the adviser, were designed to give creditor representatives visibility into sales, proceeds, execution and staking activity.

Why the portfolio drew market attention

The debtors’ stakeholder presentation, filed September 11, reported roughly $3.4 billion of digital assets at market value as of August 31. It listed approximately $1.162 billion of SOL, $560 million of BTC and $192 million of ETH among the largest positions. Those figures were a dated valuation snapshot, not cash proceeds, and did not establish that every token could be sold near its marked price. Portfolio concentration, token lockups and thin liquidity could all separate a stated market value from realizable value.

That helps explain the architecture of the order. The estate wanted flexibility to reduce exposure to volatile holdings; the limits and confidential notice process sought to reduce information leakage and market disruption. Reuters reported from the September 13 hearing that the official creditors’ committee and an ad hoc committee representing non-U.S. customers supported the proposal, while Dorsey overruled objections from two customers.

What remained unresolved

The order converted legal permission into a framework, not a recovery result. It did not decide ownership disputes between the estates and customers, set claim values, guarantee sale prices or establish a distribution timetable. It also expressly avoided deciding whether any digital asset or transaction was a security and preserved the Securities and Exchange Commission’s right to challenge transactions.

As of September 13, the measurable development was therefore narrower than the headline portfolio figure but institutionally important: one of crypto’s largest bankruptcies had gained an immediately effective, court-supervised mechanism to turn a diverse token inventory into cash while attempting to contain execution risk.