Bankrupt crypto exchange FTX has received approval from a Delaware bankruptcy court to sell approximately $873 million of its trust assets. This move aims to repay the creditors who were negatively affected by the collapse of the exchange in 2022. The assets to be sold include FTX’s stakes in various trusts issued by Grayscale Investments, valued at $807 million, and Bitwise, a custody service provider, valued at $66 million. It is worth noting that while the court document mentions $744 million in assets, this figure reflects the valuation as of October 25, 2023, and the actual value has increased since then.
The approval comes four weeks after FTX debtors filed a motion to Judge John Dorsey on November 3, requesting permission to sell six cryptocurrency trusts. These trusts include the Grayscale Bitcoin Trust (GBTC), Grayscale Ethereum Trust (ETHE), and Bitwise 10 Crypto Index Fund (BITW). Notably, FTX currently holds more than 22 million units of GBTC, which has a current value of $691 million, and 6.3 million shares of ETHE, now worth approximately $106 million. The other three trusts that FTX can sell to recover funds for its impacted customers are Grayscale’s Ethereum Classic Trust (ETCG), Litecoin Trust (LTCN), and Digital Large Cap Trust (GDLC).
After FTX’s collapse in November 2022, the company’s administrators, led by John J. Ray III, have been diligently working to recover assets. To date, approximately $7 billion has been recovered, with cryptocurrencies accounting for $3.4 billion of that sum. In June, FTX debtors estimated that the total misappropriated customer assets amounted to $8.7 billion.
In November 2022, Sam Bankman-Fried, the former head of FTX, faced a collapse of his empire. Recently, on November 2, he was found guilty of seven fraud-related charges. Bankman-Fried’s sentencing is scheduled for March 28, and he is currently being held in the Metropolitan Detention Center in Brooklyn. Notably, he recently paid four mackerels in exchange for a haircut while in detention.
The approval for FTX to sell $873 million worth of assets marks a significant step towards repaying creditors impacted by the exchange’s collapse. By liquidating its stakes in Grayscale Investments and Bitwise trusts, FTX aims to return funds to its customers and continue its recovery efforts. While the recovery process has been ongoing, with billions of dollars in assets already retrieved, the anticipation for Bankman-Fried’s sentencing persists. The outcome of this high-profile case will undoubtedly have lasting implications on the crypto industry and serve as a cautionary tale for other participants.
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