The bankruptcy court in Delaware has given permission to bankrupt cryptocurrency exchange FTX to sell approximately $873 million worth of trust assets. This move aims to repay creditors who suffered from the collapse of the exchange in 2022. The assets include FTX’s stakes in trusts managed by Grayscale Investments and custody service provider Bitwise, valued at $807 million and $66 million, respectively. Although the court document states a total valuation of $744 million, this figure is from October 25, 2023, and the assets have since increased in value.
FTX debtors filed a motion to Judge John Dorsey on November 3 to seek permission for the sale of six cryptocurrency trusts owned by the exchange. These trusts include the Grayscale Bitcoin Trust, Grayscale Ethereum Trust, and Bitwise 10 Crypto Index Fund. Currently, FTX holds over 22 million units of GBTC, worth $691 million, and 6.3 million shares of ETHE, valued at approximately $106 million. The remaining three trusts that FTX can sell are Grayscale’s Ethereum Classic Trust, Litecoin Trust, and Digital Large Cap Trust. The sale of these assets aims to recover funds to compensate impacted FTX customers.
Since the collapse of Sam Bankman-Fried’s empire in November 2022, FTX’s administrators, led by John J. Ray III, have been diligently working to recover assets. So far, they have managed to retrieve around $7 billion, with cryptocurrencies accounting for nearly half of the total ($3.4 billion). In June, FTX’s debtors estimated that a staggering $8.7 billion of customer assets had been misappropriated. These efforts to recover funds and repay creditors are crucial for restoring trust and stability in the cryptocurrency industry.
Amidst the bankruptcy proceedings, Sam Bankman-Fried, the founder of FTX, is facing legal troubles. On November 2, he was convicted on seven fraud-related charges, and his sentencing is scheduled for March 28. Currently, he remains in Brooklyn’s Metropolitan Detention Center. Bankman-Fried’s conviction and potential sentencing serve as a stark reminder of the importance of regulatory compliance and ethical practices in the cryptocurrency space.
The approval of the asset sale for bankrupt FTX marks a significant step towards repaying creditors affected by the exchange’s collapse. The sale of trust assets, including stakes in Grayscale Investments and Bitwise, is expected to generate approximately $873 million. This will help compensate impacted FTX customers and contribute to the ongoing efforts of asset recovery led by the exchange’s administrators. As the legal proceedings continue for Sam Bankman-Fried, the cryptocurrency industry faces a critical moment to ensure compliance, transparency, and ethical behavior. This case emphasizes the need for robust regulations and safeguards to prevent similar incidents and promote trust in the digital asset space.