The transfer of Digital Custody was justified by the fact that FTX US has not resumed operations, as stated by FTX’s legal team.
Terence Culver, D.C.’s original CEO and seller, has provided financing for the sale of Digital Custody to CoinList at a substantial markdown of $500,000. The FTX debtors estate, managed by CEO John Ray III, has filed to do so. FTX paid $10 million to acquire Digital Custody in the beginning.
Per FTX’s legal filing, D.C. was acquired to provide custodial services on behalf of FTX US and LedgerX. Three months after acquiring D.C., former CEO Sam Bankman-Fried filed for insolvency in November 2022, before D.C.’s complete integration into the FTX ecosystem. In two transactions totaling $5 million, FTX acquired the business in December 2021 and August 2022.
FTX file motion to sell Digital Custody for $500k which FTX bought for $10m to Terrence Culver (person who sold DCI to FTX for $10m)— Sunil (FTX Creditor Champion) (@sunil_trades) February 10, 2024
A&M (UCC/Ad hoc agrees) says this reflects a fair price for the valuable license from South Dakota that allows it to provide custody pic.twitter.com/QZ8XGVoHQ8
FTX’s legal team clarified that Digital Custody is of little value to the estate since FTX US has yet to be restarted. It is stated that:
“DCI is 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 U.S..”
Despite this, D.C. retains a custodial license issued by the South Dakota Division of Banking. Following a thorough assessment of three proposals, one of which was put forth by Culver, the debtors opted for the superior offer because of its expeditious completion, a mutually beneficial association with Culver, and the expectation that this would expedite regulatory approval.
The legal department of FTX stated that the transaction was approved by both the committee and the ad hoc committee, which was comprised of non-U.S. customers of FTX.com.
Nonetheless, FTX may submit a superior offer for D.C. until three days before the closing, per the terms of the agreement. In the event that the vendor neglects to finalize the transaction, a $50,000 reverse termination fee will be assessed.
FTX, a defunct cryptocurrency exchange, has clarified that its reorganization objectives do not involve a complete company relaunch but rather the full repayment of customers. During a court hearing on January 31, FTX attorney Andy Dietderich emphasized that relaunching FTX is outside the cards despite the company’s extensive efforts.
Before this, many FTX users petitioned a bankruptcy judge in the United States to halt the collapse of the cryptocurrency exchange’s assessment of their deposits in FTX using prices from 2022. They asserted that this strategy hindered their ability to capitalize on the recent surge in cryptocurrency prices.