Crypto exchange FTX, now defunct, is poised to sell one of its Digital Custody Inc. (DCI) units at a fraction of its original price. Purchased by FTX for $10 million in August 2022, the DCI unit will now be sold to the token sale platform CoinList for a mere $500,000.
Initially, FTX acquired DCI to provide custodial services for FTX.US and U.S.-based LedgerX. However, due to FTX’s collapse, DCI was never integrated into either operation.
DCI’s Operations Decline After LedgerX Sale
Subsequent to the sale of LedgerX and FTX’s decision not to restart or sell its exchange, DCI’s operations dwindled, as per a court filing. Nonetheless, DCI still holds value as it possesses a custody license from South Dakota.
The bankruptcy filing stated that a swift sale of the DCI unit would help FTX defray or avoid further operational expenses associated with it.
“DCI is also 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 US,” the filing added.
Instead of conducting an auction, FTX debtors opted to consider higher bids from other interested parties up to three days before the sale hearing.
After evaluating other offers, FTX debtors concluded that the sale to CoinList and Digital Custody CEO, Terrence Culver, would be the most favorable outcome. Culver played a key role in securing DCI’s custody license in South Dakota and can execute the purchase swiftly.
Culver will finance CoinList through convertible notes for the acquisition. The deal includes a $50,000 break-up fee in case of a failed transaction.
FTX Aims to Repay All Creditors
FTX has expressed its intention to repay all its creditors and has actively sought to divest some of its subsidiaries as part of the ongoing bankruptcy process.
Recently, the exchange sought approval to sell its 8% stake in AI startup Anthropic Holdings. FTX requested permission to sell the stake and proposed two possible procedures: an auction or a private sale.
The exchange also requested a shortened period for objections, with a court hearing scheduled for February 22 to expedite the process.
The precise price sought for the Anthropic shares was redacted from the filing, as FTX’s legal team believes public disclosure could hinder the potential to obtain higher offers for the stake.
Anthropic Holdings achieved a reported valuation of up to $18 billion in December 2023, indicating that FTX’s 7.84% stake could be worth approximately $1.4 billion.
Digital Custody’s sale at a significantly reduced price reflects FTX’s efforts to restructure and address its financial obligations amidst the fallout from its bankruptcy. As the process continues, FTX remains committed to resolving its debts and finding viable solutions for its remaining assets.
Earlier this month, the platform also filed a motion in a Delaware court to sell its $175 million claim against bankrupt digital financial services firm Genesis Global Capital.
