Key Takeaways
- The main aim behind the sale of these “trust assets” is to ensure readiness for creditor distributions
- The proposal includes the establishment of a pricing committee with representation from all stakeholders.
Bankrupt cryptocurrency exchange FTX, along with its debtors, has submitted a request to the U.S. bankruptcy court in Delaware seeking approval to sell trust assets, including funds from Grayscale and Bitwise, valued at an estimated $744 million. The proposed sale, to be facilitated through an investment adviser, is intended to prepare for forthcoming distributions to creditors and enable FTX to execute asset sales at an opportune time.
The primary aim of the sale of these “trust assets” is to ensure the estates are ready for forthcoming distributions to creditors and to provide FTX with the flexibility to sell these assets swiftly when the right opportunity arises. By consolidating the sales into a single process, the associated costs and delays of filing separate motions for each proposed sale can be minimized, as mentioned in the court filing.
The trust assets in question encompass $691 million held across five Grayscale Trusts and $53 million managed by Bitwise, based on their market values as of October 25, 2023. These trusts offer investors exposure to digital assets without direct ownership.
FTX and its debtors have emphasized the proactive approach of mitigating the risk of price fluctuations, which they believe will best protect the value of the trust assets. This strategy aims to maximize returns to creditors and promote equitable distribution of funds within the debtor’s plan of reorganization.
In addition to engaging an investment adviser for the sale process, the debtors have proposed the establishment of a pricing committee featuring representation from all stakeholders. The investment adviser will be tasked with obtaining a minimum of two bids from different counterparties before finalizing any asset sale.
The request from FTX and its debtors will now be reviewed and considered by the bankruptcy court in Delaware. This development follows FTX founder Sam Bankman-Fried’s recent conviction for defrauding customers and lenders. A tentative sentencing date of March 28, 2024, has been set, with legal experts estimating a potential prison term ranging from 15 to 20 years, despite a theoretical maximum of 115 years.
FTX, once one of the world’s largest cryptocurrency exchanges, faced bankruptcy in November last year after reports revealed the misappropriation of customer funds by the firm.
