FTX Bankruptcy Drama Intensifies: Multimillion Trust Assets Hang In The Balance

FTX Bankruptcy Drama Intensifies: Multimillion Trust Assets Hang In The Balance

Benzinga – Collapsed FTX exchange and its debtors appealed to the U.S. bankruptcy court of Delaware for approval of the sale of some trust assets which are funds of Grayscale and Bitwise valued at around $744 million.

What Happened: A court filing on Friday has proposed the sale or transfer of trust assets, which would facilitate the preparation for impending distributions to creditors in U.S. currency, as reported by CoinDesk. This move would also grant the debtors the agility to expediently sell the trust assets when the time is deemed right.

The news comes on the heels of Benzinga’s Future Of Digital Assets Event in New York scheduled on Nov.14. Attend and learn more about the FTX collapse and the next steps for the exchange. The gathering is seen as pivotal for the digital assets community. The event will spotlight the latest trends, innovations, and challenges in the digital asset realm.

Also Read: FTX Seeks To Refund 90% Of Funds, Defying The Odds

The filing further states, “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.”

The trusts act as an onboarding instrument for investors to gain crypto exposure without owning the assets. The trust assets are held in one Bitwise trust valued at $53 million (based on Oct.25, 2023) and five Grayscale trusts valued at $691 million.

Why It Matters: The debtors assume that with this step they can initiate to reduce the risk of price swings and protect the trust assets’ value. Also, it will enable maximization of the return to creditors and promote an equitable distribution of funds in the debtor’s plan of reorganization.

Read Next: FTX Has A Secret $7B Crypto Treasure Trove: Here Are The Details

The debtors meanwhile have also proposed the setting up of a pricing committee in which all stakeholders are represented, CoinDesk reported. Also, an investment advisor will be used who will have to obtain a minimum of two bids from different counterparties before the sale of assets.

FTX filed for bankruptcy in November 2022 amid the firm’s customer fund misappropriation. Sam Bankman-Fried’s sentencing is set for March 28, 2024.

In the last week of October, the court approved the liquidation of almost $3.4 billion in FTX’s crypto assets. Those sales were in batches of $50 million and $100 million to avoid any market dump effects.

Industry titans BlackRock, DTCC, OCC, State Street, Société Générale, Hedera, Citi, BMO, Northern Trust, Citibank, Amazon, S&P Global, Google, Invesco, and Moody’s will join our November 13 Fintech Deal Day and November 14 Future of Digital Assets. Secure a spot here to join them.

Photo: Shutterstock

© 2023 Benzinga does not provide investment advice. All rights reserved.

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