More

    FTX Fire Sale: Digital Custody Goes for $500K After $10M Buy

    Key Takeaways:

    • FTX to sell DCI for a significant loss ($10 million to $500,000) as part of bankruptcy proceedings.
    • Token sale platform CoinList and DCI’s former CEO are the preferred buyers due to licensing expertise and fast execution potential.
    • Sale highlights FTX’s broader efforts to repay creditors through asset sales.

    Sam Bankman-Fried’s defunct cryptocurrency exchange FTX is set to sell one of its subsidiaries, Digital Custody Inc. (DCI), for just $500,000, a significant decline from the $10 million it paid for the company just months before filing for bankruptcy.

    According to court documents filed last week, FTX purchased DCI in August 2022 with the intention of using its custodial services for its US operations, FTX.US, and the acquired platform LedgerX. However, the rapid downfall of FTX, which filed for bankruptcy in November 2022 following allegations of financial mismanagement, rendered these plans obsolete.

    Despite its limited current operations, DCI holds value thanks to its acquired South Dakota custody license. Recognizing this, FTX seeks to offload the unit and recoup some costs through its ongoing bankruptcy proceedings.

    The proposed sale to token sale platform CoinList marks a steep discount from the original purchase price. While FTX will consider higher bids until the sale hearing, the court filing indicates they view CoinList and DCI’s former CEO Terrence Culver (also involved in obtaining the South Dakota license) as the ideal buyers due to their familiarity and ability to expedite the deal.

    Culver will use convertible notes to finance the purchase, and a $50,000 break-up fee applies if the transaction falls through. This sale represents another step in FTX’s efforts to repay its creditors, which reportedly exceed $1 billion.

    FTX previously announced plans to divest a stake in AI startup Anthropic, in which it and its affiliated investment firm invested $500 million in 2021. The exchange hopes to generate funds through such asset sales to fulfill its financial obligations during its bankruptcy proceedings.

    Stay in the Loop

    Get the daily email from CryptoNews that makes reading the news actually enjoyable. Join our mailing list to stay in the loop to stay informed, for free.

    Latest stories

    - Advertisement - spot_img

    You might also like...