FTX Seeks Court Approval to Sell Trust Assets Worth $744 Million

• FTX has requested permission from the Delaware bankruptcy court to sell trust fund assets valued at approximately $744 million.
• The assets in question include those from crypto asset manager Grayscale Investments and custody service provider Bitwise.
• The assets to be sold are held in one Bitwise trust worth $53 million and five Grayscale trusts totaling $691 million.

Bankrupt crypto exchange FTX has requested the bankruptcy court in Delaware allow it to sell certain key trust fund assets valued at around $744 million. The proposed sale includes assets from crypto asset manager Grayscale Investments and custody service provider Bitwise.

In a court filing on November 3, FTX debtors asked the court for permission to liquidate the trust assets in preparation “for forthcoming dollarized distributions to creditors.” The assets are held in one Bitwise trust worth $53 million and five Grayscale trusts totaling $691 million.

Trusts allow investors to gain exposure to crypto assets without directly owning them. The FTX filing stated that selling the assets now would “mitigate the risk of price swings” and “thereby maximize the return to creditors.” The company aims to promote “an equitable distribution of funds” through its reorganization plan.

To oversee the process, FTX proposed that an investment adviser approve the sales and that a pricing committee represented by stakeholders be involved. This follows the court previously greenlighting the sale of nearly $3.4 billion in FTX crypto assets. Those sales occurred in batches of $50 million and $100 million to avoid flooding the market.

Latest FTX update comes amidst SBF’s verdict

The latest chapter in FTX’s downward spiral comes on the heels of its former CEO, Sam Bankman-Fried, being found guilty on all counts in his New York criminal trial.

The verdict delivered on December 22 found Bankman-Fried guilty of wire fraud, commodities and securities fraud, and money laundering conspiracy. Sentencing is scheduled for March 28, 2024.

FTX entered bankruptcy on November 11, 2022, after customers rushed to withdraw funds and exposed a lack of assets to back withdrawals. The swift collapse of the once-high-flying crypto exchange has rocked the digital asset industry.

Many former partners and investors in FTX have written their investments down to zero as the company works through Chapter 11 bankruptcy. The proposed trust asset sales could provide a small boost to creditors waiting to recoup losses. However, the outcome remains uncertain as legal proceedings continue.