April 23, 2024

Bankrupt Crypto Exchange FTX Granted Approval to Sell Anthropic Shares Amid Legal Dispute

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U.S. Bankruptcy Judge John Dorsey, in Wilmington, Delaware, has approved the proposal by bankrupt crypto exchange FTX to sell its shares in the artificial intelligence startup Anthropic. The decision comes after FTX reached a compromise in court with a group of customers who had initially opposed the sale.

FTX had made a $500 million investment in Anthropic back in 2021, acquiring a 7.84 percent stake in the company, as revealed in court documents. The sale of these shares is part of FTX’s court-supervised effort to liquidate its assets and compensate customers who faced account access issues when the exchange collapsed in 2022.

Meanwhile Kraken argued in its motion to dismiss that the SEC’s lawsuit did not allege fraud and stretched the definition of a contract. Kraken further contended that cryptocurrencies listed in the SEC’s complaint should be treated as commodities, not securities.

The SEC’s lawsuit against Kraken, filed in the Northern District of California in November, accused the exchange of failing to register as a broker, clearinghouse, or exchange. It also claimed that Kraken commingled customer and corporate funds. Kraken’s motion to dismiss draws parallels with ongoing cases, asserting that items like comic books or baseball cards can be investments but are not considered investment contracts.

In a noteworthy aspect of its argument, Kraken asserted that the SEC did not meet the requirements outlined by the Howey Test, a Supreme Court precedent used to identify securities. According to Kraken’s motion, the SEC did not “plausibly allege” that any of the cryptocurrencies listed in its complaint qualify as securities or investment contracts.

 

Digital Assets Desk

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