FTX to Offload Digital Custody Inc. to CoinList for $500K Amid Bankruptcy

FTX, led by Sam Bankman-Fried, intends to sell Digital Custody Inc. (DCI) for a mere fraction of its initial purchase price.

FTX acquired DCI for $10 million on August 6, 2022, from Digital Finance Group and DCI’s CEO, Terrence Culver, as revealed in a court filing. However, just three months later, FTX filed for bankruptcy following revelations about the true state of Bankman-Fried’s business empire.

Initially intended to provide custodial services for FTX.US and U.S.-based LedgerX, DCI was never integrated into either operation due to the collapse of the FTX empire. Despite holding a custody license from South Dakota, DCI’s operations dwindled following the sale of LedgerX, leaving it with limited functionality.

JUST IN: Lawsuit filed by FTX debtors aims to recover $935 million allegedly 'fraudulently' transferred to Bybit's investment arm. pic.twitter.com/gUlA9pQHcd

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According to the court filing, FTX debtors believe that selling Digital Custody Inc (DCI) promptly will help defray or avoid further operational expenses. With FTX.US sold and no plans to restart operations, DCI no longer serves a purpose within FTX’s business model.

“The Debtors believe that a prompt sale of the Interests will enable the Debtors to defray or avoid any further and additional operational, carrying or other expenses associated with the Interests,” the filing said. “DCI is also no longer useful to the Debtors’ business given the Debtors’ sale of LedgerX and that it is unlikely for the Debtors to sell or restart FTX US,”

FTX filling

Sale of Digital Custody Inc. to CoinList

Rather than holding an auction, FTX debtors opted to directly sell DCI to CoinList and Culver, citing Culver’s role in securing DCI’s license and his ability to swiftly execute the purchase. Culver will finance the transaction through convertible notes, with a $50,000 break-up fee attached should the deal falter.

FTX reiterated its commitment to repaying creditors and has been actively divesting subsidiaries as part of its bankruptcy proceedings. This includes plans to sell a stake in Anthropic, an artificial intelligence (AI) startup in which FTX and sister investment firm Alameda invested $500 million in 2021.

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