FTX US Derivatives was a digital currency futures and options exchange and clearinghouse regulated by the Commodity Futures Trading Commission (CFTC). Following the bankruptcy of its parent company, FTX, in 2022, it was excluded from the bankruptcy proceedings. Today, under new ownership, the platform operates as LedgerX. Now owned by Miami International Holdings (as of May 2023), it continues to serve the financial community.
The exchange provided physical settlements for all contracts, block trading, and algorithmic trading opportunities for institutional investors. Importantly, it also granted direct access to individual traders.
Key Features of LedgerX
- Regulated Crypto Derivatives: Initially known as FTX US Derivatives, this platform offered regulated trading for bitcoin and ether derivatives, including futures, options, and swaps.
- Clearinghouse for Institutional Investors: LedgerX acts as a clearinghouse, enabling negotiated cryptocurrency block trades among institutional investors.
- Bankruptcy Rebellion: Unlike its parent company, FTX, which filed for bankruptcy in November 2022, this entity remained solvent and continued operations.
- Rebranded Ownership: In May 2023, LedgerX came under the ownership of Miami International Holdings, ensuring continued operations under a reputable owners.
Understanding LedgerX’s Path from FTX US Derivatives
FTX US Derivatives made waves as the first exchange in the U.S. to offer cryptocurrency contracts using fractional cryptocurrencies. Bitcoin contracts were termed mini-contracts, and ether contracts as deci-contracts. This innovation allowed granular trades, crucial for scalable market fluctuations. FTX US Derivatives held registrations with the CFTC as a Designated Contract Market, Derivatives Clearing Organization, and Swap Execution Facility.
In October 2021, the acquisition of LedgerX by FTX led to a temporary rebranding to FTX US Derivatives. This platform specialized in crypto futures, options, and swaps, all of which were delivered physically instead of cash-settled.
The tumultuous events of November 2022 saw FTX filing for bankruptcy due to liquidity crises resulting from massive customer withdrawals. During this period, it unearthed a complex web of alleged misconducts led by founder Sam Bankman-Fried, who eventually stepped down and faced several fraud charges. While this affected many FTX-owned entities, FTX US Derivatives exception contiued to prosper, regaining the name LedgerX.
Futures Trading
Much like traditional futures contracts, LedgerX’s crypto futures enabled investors to set prices and times for future operations. The contract sizes fluctuated based on the underlying cryptocurrency. LedgerX also provided contracts for the initial and subsequent months and quarterly settlements.
Swaps
Swap contracts from LedgerX offered an economical method for transacting in cryptocurrencies. Fully collateralized, these future and swap contracts included services for institutional investors, facilitating direct negotiations of block trades with LedgerX as the clearinghouse.
What Led to FTX’s Downfall?
In an iconic turn of events, LedgerX, originally acquired and rebranded by FTX in 2021, endured beyond FTX’s financial demise in 2022. LedgerX then reobtained its name and refined its operations under the aegis of Miami International Holdings.
Financial Restructuring Leadership
John J. Ray III, notable for restructuring Enron, took charge as CEO of FTX in November 2022.
Legal Liabilities for Sam Bankman-Fried
Sam Bankman-Fried, the former CEO of FTX, confronted numerous lawsuits and was found guilty of wire fraud, conspiracy, and money laundering cited in a comprehensive class-action lawsuit representing FTX customers.
Conclusion
FTX US Derivatives’ journey from a subsidiary of FTX to its rebirth as LedgerX stands as a testament to its resilience and adaptation. Now rejuvenated under Miami International Holdings, LedgerX continues to contribute to the dynamic field of cryptocurrency derivatives, maintaining its legacy of regulated, innovative financial solutions.
Related Terms: Crypto Exchanges, Financial Derivatives, Commodity Futures Trading Commission, Miami International Holdings.
References
- X. “Zach Dexter, 3:02 p.m., May 4, 2023”.
- LedgerX. “About Us”.
- LedgerX. “Institutional”.
