Key takeaways:
- FTX plans to sell its subsidiary, Digital Custody Inc, at a price 20 times lower than its purchase price.
- The sale of Digital Custody Inc to CoinList for $500,000, a fraction of its original acquisition cost.
In the volatile realm of cryptocurrency, where fortunes are made and lost on the whims of market fluctuations, FTX finds itself navigating treacherous waters.
Once a dominant force in the crypto exchange arena, FTX now faces the spectre of bankruptcy, its former empire crumbling under the weight of financial strain.
John J Ray III, CEO of FTX debtor’s estate, has initiated the sale of Digital Custody to CoinList at a staggering markdown of $500,000.
This stands in stark contrast to the $10 million FTX initially invested in acquiring Digital Custody back in 2021, marking a drastic 95% decrease in value.
Digital Custody was originally envisioned as a cornerstone asset for FTX’s custodial services, particularly for its U.S. operations, FTX US and LedgerX.
However, with FTX US yet to resume operations and LedgerX sold off, Digital Custody’s relevance to FTX’s current business strategy has diminished significantly.
FTX’s restructuring advisor, Alvarez & Marshal, has defended the fairness of the sale price, citing prevailing market conditions and licensing agreements. Despite this assertion, creditors remain skeptical, concerned about the implications of FTX’s restructuring plans on cryptocurrency asset prices.
The decision to sell Digital Custody to CoinList was made after evaluating multiple offers, with the primary considerations being the ability to swiftly complete the sale and establish a favorable relationship with Terence Culver, CEO of Digital Custody.
Culver’s involvement is believed to expedite regulatory approval, crucial for navigating the complex landscape of cryptocurrency regulations.
However, investor unease persists, with questions raised about CoinList’s financial stability in light of past controversies, such as mass KYC deletions.
As FTX continues its restructuring efforts and progresses through bankruptcy proceedings, speculation abounds about the potential impact on cryptocurrency markets.
Of particular concern to crypto holders is the proposed plan to liquidate a significant portion of FTX’s crypto assets, a move that could potentially influence asset prices across the board. As creditors prepare to vote on the proposed plan, the future of FTX and its implications for the wider cryptocurrency ecosystem remain uncertain.
