A Delaware bankruptcy court has given the green light to FTX for the sale of approximately $873 million in trust assets for creditor repayment. This approval, documented on Nov. 29, marks a crucial step in the ongoing efforts to address the aftermath of FTX’s downfall.
Asset Breakdown and Valuation Update
The approved $873 million in assets primarily consists of FTX’s stakes in various trusts issued by leading crypto asset manager Grayscale Investments and custody service provider Bitwise. Specifically, Grayscale’s flagship product, the Grayscale Bitcoin Trust, contributes nearly $700 million to this pool. This further reflects the significant role it plays in FTX’s asset portfolio.
It’s important to note that the court document references a total of $744 million in assets, as of Oct. 25, 2023. However, since that date, the value of these assets has experienced an increase, underscoring their dynamic nature. This valuation update highlights the evolving financial landscape that FTX and its administrators navigate.
Debtor Motion and Cryptocurrency Trusts: Legal Timeline
The approval follows a motion filed by FTX debtors to Judge John Dorsey on Nov. 3, seeking permission to sell six cryptocurrency trusts. These trusts include notable entities such as the Grayscale Bitcoin Trust (GBTC), Grayscale Ethereum Trust (ETHE), and Bitwise 10 Crypto Index Fund. Further, it emphasizes the legal steps taken to address FTX’s financial challenges.
FTX Holdings and Recovery Strategy
Currently, FTX holds over 22 million units of GBTC, valued at $691 million, and 6.3 million shares of ETHE, now worth approximately $106 million. These figures underscore the substantial holdings FTX possesses in Grayscale’s flagship products, positioning them as key assets for creditor repayment.
The approval grants FTX the ability to sell additional trusts, including Grayscale’s Ethereum Classic Trust, Litecoin Trust, and Digital Large Cap Trust. This expanded trust portfolio enhances FTX’s strategy to recover funds for impacted customers. Also, it sheds more light on the comprehensive approach taken by FTX’s administrators, led by John. J Ray III.
Since the collapse of Sam Bankman-Fried’s former empire in November 2022, FTX’s administrators have been diligently working to recover assets. To date, approximately $7 billion in assets have been successfully recovered, with cryptocurrencies contributing nearly half of this amount, totaling $3.4 billion. This progress reflects the dedication and effectiveness of the ongoing recovery efforts.
Legal Proceedings, Bankman-Fried’s Conviction and Detention Center Update
Against the backdrop of recovery efforts, Sam Bankman-Fried, the key figure behind FTX’s downfall, faced legal consequences. On Nov. 2, he was convicted on seven fraud-related charges. Scheduled for sentencing on March 28, 2024, Bankman-Fried’s conviction marks a significant development in the legal aftermath of FTX’s collapse.
While awaiting sentencing, Bankman-Fried remains in Brooklyn’s Metropolitan Detention Center. A recent incident highlights his resourcefulness, as he reportedly paid four mackerels in exchange for a haircut—an unconventional currency choice that adds a unique dimension to his current circumstances.