FTX Exchange Secures Court Approval to Sell Trust Assets Worth $873M
In a bid to repay its debtors, the bankrupt cryptocurrency exchange FTX has been granted permission to sell about $873m of its trust assets, including shares in Grayscale and Bitwise.
The now-bankrupt cryptocurrency exchange FTX has obtained legal approval to liquidate roughly $873 million of its trust assets to pay back its creditors, according to a court filing in a Delaware bankruptcy court dated Nov. 29. These assets will be derived from FTX’s equity stakes in various trusts managed by crypto asset manager Grayscale Investments and Bitwise — a custody service provider.
FTX’s trust assets include over 22 million units of Grayscale Bitcoin Trust (GBTC), Grayscale’s principal Bitcoin product, which is currently valued at $691 million, and around 6.3 million shares of Grayscale Ethereum Trust (ETHE), now estimated at approximately $106 million.
Alongside GBTC and ETHE, the other trusts FTX can now liquidate to recover funds for affected customers include Grayscale’s Ethereum Classic Trust (ETCG), Litecoin Trust (LTCN), and Digital Large Cap Trust (GDLC).
The court document references only $744 million in assets — this discrepancy is due to the valuation figure being as of Oct. 25, 2023. The assets have increased in value since that time.
Following the failure of FTX in November 2022, its administrators, led by John. J Ray III, have been working assiduously to recover the assets. To date, they have recovered around $7 billion in assets, with nearly half ($3.4 billion) being in the form of volatile cryptocurrencies.
FTX debtors estimated in June that the total amount of customer assets misappropriated amounted to a staggering $8.7 billion. The court’s approval to sell the trust assets arrived almost a month after FTX debtors filed a motion to Judge John Dorsey on Nov. 3, requesting permission to sell the six cryptocurrency trusts.
The court decision also expanded the mandate of the crypto investment firm Galaxy to assist FTX in selling its trust assets. FTX had engaged Galaxy earlier this year to manage the estate’s extensive digital asset holdings.
Meanwhile, Sam Bankman-Fried, the former head of FTX, is set to be sentenced on March 28 after being found guilty on seven counts of fraud on Nov. 2. He currently remains in Brooklyn’s Metropolitan Detention Center.
