FTX Aims to Liquidate $744 Million in Trust Assets, Including Grayscale and Bitwise Funds

FTX, the bankrupt crypto exchange, has petitioned the Delaware bankruptcy court for approval to sell a significant portfolio of trust assets valued at $744 million. This request follows the judge’s earlier approval of a staggered sale of nearly $3.4 billion in cryptocurrency assets in September.

In the court filing dated November 3, FTX debtors formally sought the court’s permission to sell off essential trust assets, particularly those from Grayscale Investments and Bitwise, which sum up to approximately $744 million. 

These trust assets are crucial for providing exposure to cryptocurrencies for investors without necessitating direct ownership of the digital assets.

The move aims to prepare for forthcoming dollarized distributions to creditors. FTX emphasized that proactively managing potential price fluctuations will safeguard the value of these trust assets, ultimately maximizing returns to creditors and ensuring a fair distribution of funds in the planned reorganization.

The debtors proposed involving an investment adviser and suggested setting up a pricing committee represented by stakeholders to oversee the sale procedures. This step emphasizes the adherence to a transparent and collective decision-making process regarding the liquidation of these assets.

The sale of these trust assets will occur in compliance with structured sale procedures and will be conducted to prevent market dumping effects, ensuring a gradual and strategic approach to the sale.

FTX’s request for the sale of trust assets is a significant part of its ongoing bankruptcy proceedings. This step is taken in parallel with the judicial processes following the conviction of the exchange’s former CEO, Sam Bankman-Fried.

“The Debtors’ judgment is that proactively mitigating the risk of price swings will best protect the value of the Trust Assets, thereby maximizing the return to creditors and promoting an equitable distribution of funds in the Debtor’s plan of reorganization,”

the court filing highlighted.

Bankman-Fried was found guilty on multiple counts, including wire fraud, securities fraud, commodities fraud conspiracy, and money laundering conspiracy. His sentencing is scheduled for March 28, 2024.

The bankruptcy and legal proceedings have created a sense of urgency for FTX to manage its assets systematically and prepare for its plan of reorganization, ensuring a fair and equitable distribution of funds to creditors.

The court’s response to FTX’s request, along with the subsequent sale of these trust assets, will greatly impact the overall reorganization plan and the management of FTX’s bankruptcy proceedings.