FTX,
the beleaguered cryptocurrency exchange currently navigating bankruptcy
proceedings, has petitioned the Delaware bankruptcy court to authorize the sale
of crucial trust assets worth approximately $744 million. These assets,
originating from crypto asset manager Grayscale and custody service provider
Bitwise, have been targeted for sale to facilitate the preparation for
forthcoming distributions to creditors.
The
trust assets in question encompass holdings within one Bitwise trust, evaluated
at $53 million, and five Grayscale trusts valued at $691 million. These trusts
serve as pivotal onboarding mechanisms for numerous investors, offering
exposure to the cryptocurrency market without necessitating direct ownership of
digital assets.
Bitwise and Grayscale Trust Assets breakdown. Source: Court filing
In
the court filing dated November 3, FTX debtors articulated their perspective,
emphasizing that proactively mitigating the risk of price volatility will
safeguard the value of these trust assets, ultimately maximizing returns to
creditors and ensuring an equitable distribution of funds as part of the
debtors’ plan for reorganization.
This
latest development transpires following the court’s prior authorization for the
liquidation of nearly $3.4 billion in cryptocurrency assets. These liquidations
were mandated to transpire in batches of $50 million and $100 million to
prevent any potential market disruptions.
FTX’s
plea for the sale of trust assets also encompasses a request for approval by an
investment adviser, and the proposal of a pricing committee comprising
stakeholders to oversee the sales process.
Asset Liquidations and the
Complex Landscape of Exchanges
Finance Magnates
reported last week that Sam
Bankman-Fried has been found guilty on all seven counts of fraud,
conspiracy, and money laundering by a New York jury following a five-week
trial. The charges include two counts of wire fraud, two counts of conspiracy
to commit wire fraud, one count of conspiracy to commit money laundering, one
count of conspiracy to commit commodities fraud, and one count of conspiracy to
commit securities fraud.
These convictions could potentially lead to a maximum
prison sentence of 115 years. Bankman-Fried was once a prominent figure in the cryptocurrency
industry but faced allegations of orchestrating an $8 billion embezzlement
scheme. His sentencing is tentatively scheduled for March 28, 2024, and an
appeal is expected.
The
ongoing legal battles and asset…
