FTX Bankruptcy Seeks Court Approval to Liquidate $744 Million in Grayscale and Bitwise Trust Assets
In a bid to offset creditors' claims, FTX bankruptcy managers propose a sale of assets held in Grayscale and Bitwise Trusts. The exchange's founder, Sam Bankman-Fried, was recently found guilty and faces a lengthy prison sentence.
Bankrupt cryptocurrency exchange FTX, aims to sell its Trust assets worth $744 million, as per a court filing dated Nov. 3, 2023. Trust assets comprise various exchange-traded products, primarily, Bitcoin and Ethereum Trusts managed by Grayscale, and Bitwise’s 10 Crypto index fund. As of October 25, Grayscale administers approximately $691 million in FTX assets, while Bitwise oversees $53 million.
FTX bankruptcy managers argue that the sale of these assets is vital to safeguard against potential market downturns that could erode the assets’ value. This measure would maximize the value of the Debtors’ estates and expedite dollarized distributions to creditors. To achieve this, FTX plans to appoint an investment adviser authorized by the court to oversee the marketing and sale of the Trust Assets.
Edgar W. Mosley II, a managing director at Alvarez & Marsal North America, FTX’s current financial adviser, supports this move. He expressed that the proposed sale would help the FTX estates to brace for the imminent dollarized distributions to creditors. It would also allow the Debtors to swiftly sell the Trust Assets at an opportune time.
The proposed sale marks another step by FTX’s bankruptcy managers to compensate customers and investors who incurred losses from the firm’s downfall last year. As part of its bankruptcy processes, the company had already started divesting part of its crypto holdings. It recently proposed a settlement of customer property disputes, aiming to return up to $9 billion to its customers.
In a related development, FTX’s founder, Sam Bankman-Fried, was found guilty of all seven charges by a jury last week and might face more than 100 years of imprisonment.
FTX’s recent proposal for the sale of trust assets follows the court’s earlier approval of the liquidation of close to $3.4 billion in crypto assets. These assets were ordered to be sold in batches of $50 million and $100 million to prevent a market dump.
The ongoing FTX bankruptcy proceedings continue as sentencing for Sam Bankman-Fried’s criminal charges are set to be ordered on March 28, 2024.
