Bankrupt cryptocurrency exchange FTX is seeking permission from the U.S. bankruptcy court in Delaware to sell trust assets held by Grayscale and Bitwise valued at around $744 million.
Optimizing Distributions to Creditors
FTX, once one of the world’s largest cryptocurrency exchanges, filed for bankruptcy in November of the previous year following reports of misappropriation of customer funds. The proposed sale of the trust assets, encompassing five Grayscale Trusts totaling an estimated $691 million and one Bitwise-managed trust amounting to $53 million as of October 25, 2023, aims to facilitate dollarized distributions to creditors.
The debtors assert that proactively managing the risk of price fluctuations is essential to protect the trust assets’ value, ensuring maximum returns for creditors and equitable distribution of funds as part of the debtor’s reorganization plan.
Strategic Approach
Apart from using an investment adviser to oversee the sale of these assets, FTX plans to establish a pricing committee with representation from all stakeholders. Additionally, the investment adviser must secure at least two bids from different counterparties before executing the asset sales.
Ongoing Legal Implications
The founder of FTX, Sam Bankman-Fried, was recently found guilty of defrauding customers and lenders, with a tentative sentencing date set for March 28, 2024. The potential sentencing range for Bankman-Fried is between 15 to 20 years, although the theoretical maximum is 115 years.
This move is a part of FTX’s ongoing efforts to address the fallout from bankruptcy while optimizing asset utilization for the benefit of its creditors. It remains to be seen how the court will respond to this request and what impact the sales will have on the cryptocurrency industry.
