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LedgerX, the crypto derivatives exchange, has reportedly been sold to M7 Holdings, an affiliate of Miami International Holdings (MIH), in a bankruptcy auction. According to a press release, the deal is expected to generate total proceeds of about $50 million for the debtors.

In 2021, FTX.US reportedly acquired Ledger Holdings, the parent company of LedgerX, for $298 million, according to audited financial statements reviewed by CoinDesk. The purchase also included the crypto hedge fund LedgerPrime, which recently announced its decision to return external capital to investors in September 2022, citing a desire to focus on managing proprietary capital. LedgerX, which was launched in 2017, is a regulated derivatives exchange that offers trading in bitcoin and other cryptocurrencies, while LedgerPrime is a quantitative crypto hedge fund that uses algorithmic trading strategies to invest in digital assets. The acquisition of Ledger Holdings was seen as a strategic move by FTX to expand its presence in the growing cryptocurrency derivatives market.

LedgerX's sale has been the result of a turbulent auction process that involved several delays. Bankruptcy filings had originally scheduled a sale hearing for April 12, but a filing on April 10 announced that "the sale hearing regarding the sale of the LedgerX Business is postponed until further notice."

Based on financial records reviewed by CoinDesk, LedgerX reported $1.2 million in trading and clearing revenue in 2022, but recorded a negative EBITDA (earnings before interest, taxes, depreciation and amortization) of $17 million.

"We are pleased to reach this agreement with MIH, which is an example of our continuing efforts to monetize assets to deliver recoveries to stakeholders," said John J. Rray III, CEO and restructuring head of the FTX Debtors, in the release.

Miami International Holdings is a conglomerate of exchanges based in the United States, which owns several equities, options, and commodities exchanges. The company already possesses licenses to operate a U.S. Commodity Futures Trading Commission (CFTC) licensed commodities exchange, following its acquisition of the Minneapolis Grain Exchange (MGEX) in 2020. Currently, MGEX offers only one non-index commodity futures product, which is North American Hard Red Spring Wheat. With the acquisition of LedgerX, Miami would be able to venture into the realm of crypto trading.

FTX's U.S. division, which is currently bankrupt, acquired LedgerX and rebranded it as FTX.US Derivatives. LedgerX has been granted three licenses by the Commodity Futures Trading Commission (CFTC), enabling it to offer futures contracts for commodities, provide clearing services, and act as a futures broker for clients.

Following FTX's acquisition of LedgerX, several competitors made similar moves. In December 2021, Crypto.com revealed its plans to acquire both the North American Derivatives Exchange (Nadex) and Small Exchange, both of which are regulated by the CFTC, for $216 million. Just a month later, Coinbase announced its own acquisition of FairX, another CFTC-regulated derivatives exchange, for $270 million.

Source Coindesk