Bankrupt cryptocurrency exchange FTX has filed a motion to remove its Dubai unit from the ongoing bankruptcy proceedings in the United States.
According to a document submitted to the U.S. Bankruptcy Court for the District of Delaware, FTX Dubai did not conduct any business activities in the United Arab Emirates (UAE) before the global entity filed for bankruptcy and is unlikely to resume its operations.
FTX Europe established the Dubai crypto exchange in February 2022. Five months later, the unit secured a virtual asset service provider license from Dubai’s Virtual Assets Regulatory Authority (VARA).
Following VARA’s approval, FTX Dubai failed to offer any crypto-related services in the UAE until the agency suspended the license in November 2022, which expired in July 2023.
“Given the absence of any historical business or resources to commence any business in the future, FTX Dubai has no reasonable likelihood of rehabilitating its operations. Additionally, FTX Dubai is balance sheet solvent,” FTX said.
As a result, FTX believes the Dubai arm should be excluded from its bankruptcy proceedings and made to face a solvent voluntary procedure instead. The process would allow the distribution of a positive cash balance after paying outstanding liabilities and liquidating assets as per UAE laws.
At the time of the filing, FTX Dubai held approximately $4.5 million in its accounts. VARA has restricted $4 million out of the funds as security for the license with the intention to release the cash when the entity commences its liquidation process.
FTX noted that dismissing the Dubai unit from the bankruptcy proceedings would not affect creditors’ claims against the exchange as they could pursue such claims during the voluntary liquidation proceedings under UAE laws.
“In order to protect the rights and claims of the Debtors in the context of the liquidation of FTX Dubai, FTX Dubai is expected to enter into an agreement with the appointed liquidator to implement basic administrative procedures to harmonize and coordinate the activities of the liquidator of FTX Dubai and promote the orderly and efficient administration of the liquidation,” the exchange added.
Meanwhile, FTX is looking to restart its operations with plans to cater to only offshore customers and not investors in the U.S.