FTX Debtors Estate Sells Digital Custody for a Discounted Price of $500,000
The FTX debtors estate, led by CEO John Ray III, has filed to sell Digital Custody to CoinList at a significant markdown of $500,000. The financing for this sale is being provided by DC’s original CEO and seller, Terence Culver. This sale is a marked decrease from FTX’s initial purchase of Digital Custody for $10 million.
Background on FTX’s Acquisition of Digital Custody
According to FTX’s legal filing, the company acquired Digital Custody in order to offer custodial services for FTX US and LedgerX. However, due to former CEO Sam Bankman-Fried’s bankruptcy filing in November 2022, just three months after acquiring DC, the company was not fully integrated into the FTX ecosystem. FTX had purchased Digital Custody in two separate transactions, one for $5 million in December 2021 and another for $5 million in August 2022.
FTX’s Legal Team Clarifies the Value of Digital Custody
FTX’s legal team has stated that since FTX US has not been restarted, Digital Custody holds little value for the estate. The filing states, “DCI is no longer useful to the Debtors’ business, given the Debtors’ sale of LedgerX and the unlikelihood of selling or restarting FTX US.”
DC’s Custodial License and the Sale Process
Despite this, Digital Custody still holds a custodial license from the South Dakota Division of Banking. After evaluating three offers, including one from Terence Culver, the debtors selected the best offer based on the ability to complete the sale quickly and the beneficial relationship with Culver, which is expected to expedite regulatory approval.
FTX’s Legal Team Approves Transaction for DC with Option for Superior Offer
According to FTX’s legal team, both the committee and ad hoc committee of non-U.S. customers of FTX.com have approved the transaction for DC. However, as part of the agreement, FTX has the option to seek a superior offer for DC up until three days before the closing. If the buyer fails to complete the deal, a reverse termination fee of $50,000 will be imposed.
FTX Clarifies Restructuring Plans, Focusing on Repaying Customers in Full
In a Jan. 31 court hearing, FTX lawyer Andy Dietderich emphasized that the company’s restructuring plans do not involve a reboot, but rather a focus on repaying customers in full. Despite extensive efforts, there are no plans to relaunch FTX.
FTX Users Request Protection from Assessment of Cryptocurrency Deposits Using 2022 Prices
Several FTX users have asked a U.S. bankruptcy judge to prevent the collapsed crypto exchange from assessing their cryptocurrency deposits using 2022 prices. They argue that this approach prevents them from benefiting from the recent surge in crypto prices.
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