Bankrupt crypto exchange FTX is planning on selling one of its subsidiaries, Digital Custody, Inc. (DCI), to CoinList at a massive discount.
New court documents reveal that FTX is going to sell DCI, which it planned to use to provide custodial services for FTX.US and LedgerX customers, to crypto exchange CoinList for just $500,000 after acquiring it for over $10 million in 2022 – a 95% price cut.
“Seller acquired DCI, a trust company registered in South Dakota, in order to provide custodial services for cryptocurrencies and other digital property for FTX.US, its US cryptocurrency spot trading exchange, and non-Debtor LedgerX, the Debtors’ digital currency futures exchange and clearinghouse.
Given the timing of the acquisition, DCI was never integrated into the operations of FTX.US or LedgerX prior to the commencement of these Chapter 11 cases. Following the commencement of these Chapter 11 cases, the debtors sold its interest in LedgerX in May 2023. The debtors have also never sold or restarted the FTX.US exchange.”
According to the filings, CoinList (purchaser) and two other firms initially showed interest in scooping up DCI late last year, with the crypto exchange ultimately landing the deal.
“The debtors ultimately received indications of interest from three parties, including an indication of interest from purchaser, on December 15, 2023. Of these three prospective purchasers, the debtors proceeded with [the] purchaser and engaged in good faith negotiations with [the] purchaser regarding the terms of the agreement.”
FTX collapsed in November 2022 after its disgraced founder and former chief executive, Sam Bankman-Fried, was found to have been mishandling billions of dollars worth of customer funds, funneling them into Alameda Research, FTX’s sister firm, to make risky gambles on digital assets.
Bankman-Fried was found guilty on all seven charges against him in 2023.