FTX approved to liquidate $744M in Grayscale assets to pay creditors News ▸ US ▸ FTX ▸ Bankruptcy
FTX approved to liquidate $744M in Grayscale assets to pay creditors
The bankrupt exchange has spent almost a year unraveling the complex web of poorly documented trades and transactions that precipitated its collapse in November 2022.
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Updated: Nov. 29, 2023 at 11:44 pm UTC
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In a significant move towards paying billions owed to creditors, FTX has gained bankruptcy court approval to begin liquidating its $744 million worth of stakes in digital trusts managed by Grayscale Investments.
FTX, embroiled in bankruptcy since last year following its collapse, has since been working under new leadership to locate assets and unravel a tangled debt network owed to various creditors, including customers who invested cash and crypto on the platform. So far, according to court documents, FTX’s administrators have managed to recover about $7 billion in assets, including $3.4 billion worth of crypto.
FTX expressed readiness to sell its Grayscale assets held at Grayscale and Bitwise in a November 3 court filing. These Trust assets comprise various exchange-traded products Grayscale manages, including Bitcoin and Ethereum Trusts. FTX’s stakes in these trusts, worth approximately $744 million as of last month, now form part of the assets slated for sale.
FTX argued that liquidating these assets is critical to mitigate against potential downturns in the Trust Assets’ price, maximize the Debtors’ estates’ value, and allow for upcoming dollarized distributions to creditors. The company believes this monetization of Trust Assets represents a sound exercise of business judgment that will benefit creditors and stakeholders by mitigating market risk and preparing the estates for plan distributions.
As part of its liquidation strategy, FTX plans to appoint an investment adviser, whose role will be to market and sell the Trust Asset under a court-approved investment services agreement.
While the path to resolution is underway, the firm’s founder, Sam Bankman-Fried, was found guilty of all seven charges by the jury last month and potentially faces more than 100 years’ imprisonment.
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Jacob Oliver
Jacob Oliver is a recovering academic and English teacher turned crypto journalist and web3 writer. He holds a Ph.D. from the University of Washington.
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Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.
Ethereum
$2,889.09
Ethereum is a decentralized, open-source blockchain platform that enables the creation of smart contracts and decentralized applications (DApps).
FTX
FTX is a defunct cryptocurrency exchange, currently in bankruptcy proceedings, that was founded by Sam Bankman-Fried and Zixiao “Gary” Wang in May 2019.
Grayscale Investments
Established in 2013 by Digital Currency Group, Grayscale Investments is a trusted authority on digital currency investing and cryptocurrency asset management.
Bitwise
Bitwise Asset Management pioneered the first cryptocurrency index fund and is the leading provider of rules-based exposure to the cryptoasset space..
Sam Bankman-Fried is the former CEO, and co-founder of defunct crypto exchange FTX and Alameda Research.