In a significant development, the bankrupt cryptocurrency exchange FTX has received the go-ahead to liquidate approximately $873 million in trust assets. The decision, disclosed in a filing to the Delaware bankruptcy court on November 29, paves the way for the proceeds to be utilized in repaying creditors who suffered losses during the collapse of the exchange in 2022.
The bulk of the assets, totaling $807 million, will be derived from FTX’s holdings in various trusts issued by Grayscale Investments, a leading crypto asset manager. Additionally, FTX’s stakes in the custody service provider Bitwise, valued at $66 million, contribute to the overall asset pool.
It’s worth noting that the court document refers to a total of $744 million in assets, as of October 25, 2023. This figure, however, has seen an increase since then, reflecting the dynamic nature of cryptocurrency valuations.
The approval follows a motion filed by FTX debtors nearly four weeks ago on November 3. The motion, presented to Judge John Dorsey, sought permission for the sale of six cryptocurrency trusts, including notable entities such as the Grayscale Bitcoin Trust (GBTC), Grayscale Ethereum Trust (ETHE), and Bitwise 10 Crypto Index Fund (BITW).
FTX’s ownership of over 22 million units of GBTC, valued at $691 million, and 6.3 million shares of ETHE, valued at around $106 million, positions the exchange to leverage the appreciating value of these assets.
The three additional trusts that FTX is now authorized to sell include Grayscale’s Ethereum Classic Trust (ETCG), Litecoin Trust (LTCN), and Digital Large Cap Trust (GDLC). These sales are earmarked to recover funds for FTX customers adversely affected by the exchange’s downfall.
FTX’s administrators, led by John J. Ray III, have been diligently working on asset recovery since the collapse of Sam Bankman-Fried’s crypto empire in November 2022. To date, approximately $7 billion in assets has been recovered, with nearly half of that amount coming in the form of various cryptocurrencies, totaling $3.4 billion.
In June, FTX’s debtors estimated that the total amount of misappropriated customer assets stood at $8.7 billion. Meanwhile, Sam Bankman-Fried, facing seven fraud-related charges, was convicted on November 2. He is slated for sentencing on March 28 and is currently housed in Brooklyn’s Metropolitan Detention Center. Notably, he recently exchanged four mackerels for a haircut within the confines of the detention center.
Photo ( CNN)
29th November, 2023
Delino Gayweh
Serrari Financial Analyst
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