FTX's Massive $873 Million Asset Sale Approved


FTX's Massive $873 Million Asset Sale Approved
© Getty Images News/Michael M. Santiago

The bankrupt cryptocurrency exchange FTX, following its dramatic collapse in 2022, has recently received court approval to sell assets worth approximately $873 million. This move is part of a broader strategy to repay creditors affected by the exchange’s downfall.

Asset Liquidation to Aid Creditors

A November 29 filing in a Delaware bankruptcy court revealed the details of the approved asset sale. FTX’s assets for sale include stakes in various trusts issued by crypto asset manager Grayscale Investments, valued at $807 million, and custody service provider Bitwise, valued at $66 million.

While the court document initially listed assets worth $744 million, this valuation was based on October 25, 2023, figures; the assets have since increased in value. The decision to liquidate these assets follows a motion filed on November 3 by FTX debtors to Judge John Dorsey, seeking permission to sell six cryptocurrency trusts.

These include notable holdings such as over 22 million units of the Grayscale Bitcoin Trust (GBTC) and 6.3 million shares of the Grayscale Ethereum Trust (ETHE). The current market value of these holdings is approximately $691 million and $106 million, respectively.

In addition to GBTC and ETHE, FTX is also authorized to sell holdings in Grayscale’s Ethereum Classic Trust, Litecoin Trust, and Digital Large Cap Trust. These sales are pivotal in FTX's efforts to generate funds necessary to compensate the impacted customers.

The Fallout of FTX's Collapse

The collapse of FTX, once a titan in the cryptocurrency world, sent shockwaves through the industry. Under the leadership of John J. Ray III, FTX's administrators have been diligently working to recover assets since the company's downfall in November 2022.

To date, approximately $7 billion in assets has been recovered, nearly half of which is in cryptocurrencies. This recovery comes amidst ongoing legal proceedings against FTX's former CEO, Sam Bankman-Fried. Convicted on seven fraud-related charges on November 2, Bankman-Fried is slated for sentencing on March 28, 2024.

His conviction marked a significant moment in the unfolding saga of FTX's dramatic unraveling. The sale of these assets represents a crucial step in the long journey of addressing the aftermath of one of the most notable collapses in the crypto industry.

As creditors await reimbursement, the story of FTX continues to serve as a cautionary tale about the volatility and risks inherent in the cryptocurrency market.