Bankrupt crypto exchange FTX and its debtors are seeking approval from the U.S. bankruptcy court of Delaware to sell certain trust assets, including funds from Grayscale and Bitwise, estimated to be worth around $744 million. The sale is intended to facilitate forthcoming distributions to creditors and allow for a swift sale of these assets at an opportune time, as outlined in a court filing.
FTX was once one of the world’s largest cryptocurrency exchanges but filed for bankruptcy in November the previous year after allegations of customer fund misappropriation were reported by CoinDesk. Last week, FTX founder Sam Bankman-Fried was found guilty of defrauding customers and lenders by a jury. A sentencing date has been tentatively set for March 28, 2024, with experts suggesting a potential prison sentence of 15-20 years, despite the theoretical maximum of 115 years.
The “trust assets” in question are held in five Grayscale Trusts, with an estimated total value of $691 million, and one trust managed by Bitwise valued at $53 million, as of October 25, 2023. These trusts provide investors with exposure to digital assets without direct ownership.
The debtors believe that proactively managing the risk of price fluctuations is the best way to protect the value of these trust assets, ultimately maximising returns for creditors and ensuring equitable fund distribution within the debtor’s plan of reorganisation. In addition to using an investment adviser for the sale, the debtors propose the establishment of a pricing committee with representation from all stakeholders. The investment adviser will also be required to obtain a minimum of two bids from different counterparties before finalising the sale of assets.
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