FTX Seeks Sale of Grayscale and Bitwise Assets Worth $744M

In a significant move, FTX, the bankrupt crypto exchange, has sought permission from the Delaware bankruptcy court to sell key trust fund assets valued at approximately $744 million. This request follows the court’s approval for the phased-out sale of nearly $3.4 billion in crypto assets back in September.

FTX’s Motivation for Asset Sale

In a court filing on November 3, FTX’s debtors made the formal request to the court, aiming to sell these trust assets in order to prepare for “forthcoming dollarized distributions to creditors.” The trust assets in question are held within one Bitwise trust valued at $53 million and five Grayscale trusts valued at $691 million. These trusts serve as a means for investors to gain exposure to cryptocurrencies without direct ownership.

Maximizing Creditor Returns

FTX’s primary objective in selling these trust assets is to proactively mitigate the risk of price fluctuations, ultimately safeguarding the value of the Trust Assets. By doing so, the exchange aims to maximize returns to creditors and facilitate an equitable distribution of funds as part of its plan for reorganization.

Ensuring Responsible Sale

To ensure a responsible and transparent sale process, FTX debtors have proposed that an investment adviser should approve the sale of trust assets and the associated procedures. Additionally, they suggest the establishment of a pricing committee, which would include stakeholders, to oversee the sale procedure. This move seeks to maintain a fair and unbiased approach to the asset sale.

Preceding Asset Liquidation

This request for the sale of trust assets comes on the heels of the court’s earlier approval for the liquidation of approximately $3.4 billion in crypto assets. To prevent any adverse market effects, the court had ordered these assets to be sold in batches of $50 million and $100 million, a strategy designed to avoid market dumping and ensure responsible liquidation.

FTX’s Legal Woes

The FTX bankruptcy proceedings are unfolding amidst legal troubles for the exchange’s former CEO, Sam Bankman-Fried. In a recent development, a jury in New York found Bankman-Fried guilty on all seven counts during his criminal trial. These charges include two counts of wire fraud, two counts of wire fraud conspiracy, one count of securities fraud, one count of commodities fraud conspiracy, and one count of money laundering conspiracy. The judge is scheduled to deliver the sentencing in this case on March 28, 2024.

In conclusion, FTX’s request to sell Grayscale and Bitwise assets worth $744 million signifies a pivotal step in the exchange’s journey towards financial recovery and reorganization. This strategic move, aimed at maximizing creditor returns, comes as the exchange grapples with its former CEO’s legal challenges, making it a critical moment in FTX’s history.