FTX Wants to Sell $744M Worth of Grayscale, Bitwise Assets

Bankrupt crypto exchange FTX and its debtors have asked the U.S. bankruptcy court of Delaware to approve the sale of some trust assets, funds of Grayscale and Bitwise valued at an estimated $744 million, through an investment adviser, according to a court filing on Friday.

“The Debtors’ proposed sale(s) or transfer(s) of the Trust Assets will help allow the estates to prepare for forthcoming dollarized distributions to creditors and allow the Debtors to act quickly to sell the Trust Assets at the opportune time,” the filing said. “Additionally, because the Debtors may sell the Trust Assets to one or more buyers in one or more sales, sales pursuant to the Sale Procedures will alleviate the cost and delay of filing a separate motion for each proposed sale.”

FTX was one of the world’s largest crypto exchanges before it went bankrupt in November last year after a CoinDesk report shed light on customer fund misappropriation by the firm.

Last week, FTX founder Sam Bankman-Fried was found guilty of defrauding his customers and lenders by a jury. A sentencing date has been tentatively set for March 28, 2024. Theoretically, he could face 115 years in jail, but realistically, that could be between 15-20 years, according to experts.

The “trust assets” are held in five Grayscale Trusts, totaling an estimated $691 million, and one trust managed by Bitwise, amounting to $53 million, based on the market value as of October 25, 2023. The trusts allow investors to gain exposure to digital assets without owning the digital assets.

“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 filing said.

Apart from using an investment adviser, the debtors have proposed setting up a pricing committee in which all stakeholders are represented. The investment adviser shall also be required to obtain a minimum of two bids from different counterparties before the sale of assets.

Grayscale and CoinDesk are part of the same parent company, Digital Currency Group (DCG).