FTX Debt Recovery: Court Approves Sale of Grayscale Assets Worth $873M Now

FTX Debt Recovery: Court Approves Sale of Grayscale Assets Worth $873M Now

UTC by Babafemi Adebajo · 2 min read
FTX Debt Recovery: Court Approves Sale of Grayscale Assets Worth $873M Now
Photo: Shutterstock

At the time FTX filed for bankruptcy, the total amount of customer assets misappropriated was about $8.7 billion.

A Delaware bankruptcy court has granted FTX’s administrators permission to sell the defunct exchange’s trust assets. The approval comes about four weeks after the administrators filed a motion requesting the sale of the assets as part of their debt recovery efforts.

FTX holds an estimated 32 million total shares in five Grayscale trusts and the Bitwise 10 Crypto Index Fund. Selling these will help creditors recover some more of their lost funds. Just a few weeks ago, the assets were worth $744 million. Now, the investment fund is worth roughly $873 million

“The debtors are authorized, but not directed, to execute sales of the trust assets, in their reasonable business judgment,” the filing said. The court also granted crypto investment firm Galaxy permission to assist FTX in the sales of its trust assets.

Following the court announcement, the FTX token (FTT) jumped by 8% to trade at $4.26

Progress of FTX Debt Recovery Efforts

At the time FTX filed for bankruptcy, the total amount of customer assets misappropriated was about $8.7 billion. Under the leadership of John. J Ray III, FTX has been working to recover these assets.

Mr Ray noted the bankruptcy situation was the ‘most challenging financial disaster’ he had seen. However, by September, about $6.9 billion of that shortfall had been recovered. This included a Bahamas real-estate portfolio, $3.4 billion in crypto, and some cash.

“Together, the debtors and their creditors have created enormous value from a situation that easily could have been a near-total loss for customers,” Ray said.

Going by this, the sale of the Grayscale and Bitwise investment funds will further help the debt recovery effort.

Given the 17% appreciation in the asset value since the sale request was filed before the court, it is unclear if the administrators will immediately sell. This is even more important since the terms of the sale, as approved by the court, warrant maximizing their value while minimizing market disruptions.

Former FTX CEO Awaits Sentencing

Meanwhile, Sam Bankman-Fried, the former CEO of FTX, was found guilty of seven counts of fraud on November 2. He is facing a maximum sentence of 115 years in prison and will be sentenced on March 28, 2024. Until then, he is being held at the Brooklyn Metropolitan Detention Center, where he shares a cell with two other inmates: Juan Hernández, the former president of Honduras, and a former high-ranking Mexican police officer.

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