After a prolonged period of contemplation, the lawyers representing FTX, the now-defunct exchange, have made the decision to abandon the idea of restarting the company. Instead, FTX will dissolve once all outstanding debts have been settled. This sudden change in plans was recently announced by Andrew Dietrich, one of the legal representatives for FTX. Although full repayment to creditors is not yet a guaranteed outcome, it is a viable objective that the company is actively pursuing.
Dollar Value Payments
As part of the dissolution process, FTX will only be able to offer creditors the dollar value equivalent of their crypto holdings. This may come as a disappointment to investors, as the value of these assets has significantly increased since the exchange’s downfall. Nevertheless, it is precisely this surge in value that has made it possible for the exchange to offer full refunds in the first place. Furthermore, this arrangement aligns with bankruptcy law and maintains a legally sound approach to resolving FTX’s financial obligations.
While the lawyers representing FTX are diligently working to calculate the funds required for repayment, they have also secured another deal to sell off a company owned by FTX. Digital Custody Inc., a Delaware-based firm licensed to provide custody services for digital assets, will be sold to CoinList for a mere $500,000. The buyer in this case is none other than CoinList’s CEO, Terrence Culver. However, there’s an interesting twist to this transaction: Terrence Culver was the very person who initially sold Digital Custody to FTX for a staggering total of $10 million.
Changing Circumstances
FTX US acquired Digital Custody in December 2021 and August 2022 for $5 million each. The purpose behind these acquisitions was to facilitate the custody of FTX’s own assets, as well as those of its clients, within the United States. However, with FTX winding down its business operations as soon as possible, asset custody is no longer a concern. The company has deemed Digital Custody Inc. obsolete and unnecessary for its future objectives.
The committees representing non-US creditors of FTX have also given their approval for the sale of Digital Custody Inc. FTX has been granted the ability to explore alternative offers until shortly before the sale date. In the event that the buyer withdraws from the deal, FTX will collect a reverse termination fee of $50,000.
A Resolution on the Horizon
As FTX prepares for its dissolution, the company aims to settle all outstanding debts with a primary focus on repaying its creditors. While there are no guarantees regarding the full amounts that will be refunded, FTX’s lawyers are determined to pursue this objective relentlessly. The value of crypto assets held by the creditors at the time of FTX’s collapse will be the basis for these payments.
A Farewell to FTX
FTX’s decision to abandon the idea of restarting the exchange and instead dissolve the company marks the beginning of the end for this defunct entity. The sale of Digital Custody Inc. is a notable step as FTX progresses towards settling its debts and providing repayment to creditors. Although the dollar value payments may fall short of investors’ expectations due to the increased value of crypto assets, it is ultimately a result of this appreciation that full refunds are possible. With the approval of the sale from the committees representing non-US creditors, FTX can focus on bringing this chapter to a close and bidding farewell to its troubled past.