By George Ward
Liquidating Vital Trust Assets
In another twist to its ongoing insolvency issues, the embattled crypto exchange FTX has filed a motion in the Delaware bankruptcy court for permission to liquidate vital trust funds. These include assets managed by renowned crypto asset manager Grayscale and custody service provider Bitwise, estimated to be worth $744 million.
FTX debtors made the formal request on November 3 through a court filing. In addition, the move is a strategic step in preparation for upcoming distributions to creditors in USD. The recent move represents a critical step in the exchange’s efforts to navigate bankruptcy proceedings.
FTX, once a prominent player in the crypto space, was forced to declare bankruptcy after it could not overcome its liquidity challenges. The sale of these trust assets is a critical step in the debt settlement process and ensures a fair and equitable distribution to creditors.
Crypto experts closely monitor this development, expecting its potential impact on the broader digital currency market.
FTX’s $744 Million Crypto Trusts
Furthermore, FTX reportedly requests permission to liquidate critical assets held in a Bitwise trust worth $53 million and five Grayscale trusts valued at $691 million. These trusts have played a vital role in allowing investors to gain crypto exposure without directly owning digital assets.
FTX debtors have already proposed innovative measures to oversee the sale process in a court filing dated November 3. They are advocating for the involvement of an investment adviser to manage the sale of the trust assets and ensure transparency and compliance with industry best practices.
Furthermore, the debtors propose the formation of a pricing committee composed of stakeholders to participate in the sale procedure actively. This committee would be responsible for ensuring that the valuation and the sale of the trust assets are handled fairly and equitably, aligning with the interests of all parties involved.
Kickstarting The Selloff Process
These FTX debtors’ move follows a prior approval to liquidate approximately $3.4 billion in cryptocurrency assets. However, the court ordered that the sale be done in controlled batches of $50 million and $100 million as a precautionary measure to avoid any potential market disruption.
As the bankruptcy proceedings for FTX continue, the case has been complicated by the conviction of the exchange’s former CEO, Sam Bankman-Fried. The charges against the former CEO include two counts, each of wire fraud conspiracy and wire fraud.
It also includes one count each of commodities fraud conspiracy, securities fraud, and money laundering conspiracy. The sentencing hearing scheduled for March 28, 2024, will shed further light on a case that is becoming increasingly complex.
It emphasizes the seriousness of the charges brought against Bankman-Fried, as well as the potential consequences for both him and the broader crypto market. Hence, it is no surprise that stakeholders in the crypto community and the broader financial markets are keeping a close eye on the case’s developments.
The outcome of the trust asset sale and the upcoming sentencing will undoubtedly shape the course of FTX’s bankruptcy proceedings and impact the crypto industry positively or negatively.