Insolvent cryptocurrency exchange FTX has petitioned the Delaware bankruptcy court for permission to sell approximately $744 million worth of key trust fund assets of crypto asset manager Grayscale Investments and custody service provider Bitwise.
FTX debtors petitioned the court on November 3 for authorization to sell trust assets in anticipation of “imminent dollarized distributions to creditors,” which would enable the firm to make the necessary preparations.
Five Grayscale trusts, each worth $691 million, and one Bitwise trust, each worth $53 million, hold these trust assets. The trusts provide investors with initial access to cryptocurrencies without requiring them to acquire the underlying assets.
The court document states:
“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 Debtors’ plan of reorganization.”
In their request, the FTX debtors stipulated that the sale of trust assets and sale procedures require the approval of an investment adviser. In addition, they suggested incorporating a pricing committee comprised of stakeholders into the sales process.
The most recent request for the sale of trust assets by FTX debaters follows the court’s earlier approval of the liquidation of approximately $3.4 billion worth of cryptocurrency assets. To prevent market dump effects, the court ordered the disposal of these assets in increments of $50 million and $100 million.
As a result of the jury’s verdict of guilty on all seven counts against former FTX CEO Sam Bankman-Fried during his criminal trial in New York, the company is currently initiating bankruptcy proceedings.
Bankman-Fried acquitted himself of money laundering conspiracy, securities fraud, commodities fraud, and two counts of wire fraud, two counts of wire fraud conspiracy, and one count of securities fraud. March 28, 2024, is the scheduled date for the judge to render a verdict of guilt in the case mentioned above.
