FTX Seeks Approval to Sell $744 Million in Grayscale and Bitwise Trust Assets
The trust assets in question are held in five Grayscale Trusts, collectively valued at an estimated $691 million, and one trust managed by Bitwise, amounting to $53 million.
The bankrupt cryptocurrency exchange FTX, along with its debtors, has filed a request with the U.S. bankruptcy court in Delaware to gain approval for the sale of certain trust assets. These assets consist of funds held in Grayscale and Bitwise trusts, with an estimated total value of $744 million. The proposed sale will be facilitated through an investment adviser, as detailed in a court filing, according to a report by CoinDeck.
Rationale for Asset Sale
The filing suggests that selling or transferring the trust assets is essential to prepare for forthcoming distributions to creditors in dollarized form. By initiating the sale of these assets, FTX aims to expedite the process of selling them to one or more buyers, alleviating the cost and delay associated with filing separate motions for each sale. Additionally, proactively mitigating the risk of price fluctuations is deemed crucial to protect the value of the trust assets, maximize returns for creditors, and ensure an equitable distribution of funds as part of the debtor's reorganization plan.
Details of Trust Assets
The trust assets in question are held in five Grayscale Trusts, collectively valued at an estimated $691 million, and one trust managed by Bitwise, amounting to $53 million. These assets allow investors to gain exposure to digital assets without directly owning the underlying assets.
The debtors propose to involve an investment adviser in the sale process, and the adviser will be required to obtain a minimum of two bids from different counterparties before the assets are sold.
FTX's Legal Situation
FTX, once one of the world's largest cryptocurrency exchanges, filed for bankruptcy in November last year following allegations of customer fund misappropriation. Its founder, Sam Bankman-Fried, was recently found guilty of defrauding customers and lenders. A tentative sentencing date of March 28, 2024, has been set. Although he theoretically faces a maximum sentence of 115 years, experts suggest the practical outcome could range from 15 to 20 years in jail.
Risk Mitigation and Creditor Protection
FTX's judgment is that proactive risk mitigation measures, including the sale of trust assets, are vital to safeguard the assets' value and ensure maximum returns for creditors, ultimately contributing to an equitable distribution of funds as part of the debtor's reorganization plan.
