FTX plans sale of Digital Custody Inc. for $500K in bankruptcy move

The NFT Unicorn b264f7bb-91f3-4ab2-a1df-1a448b877c38 FTX plans sale of Digital Custody Inc. for $500K in bankruptcy move Crypto News

The FTX Debtors estate, led by CEO John Ray III, has filed to sell another one of its assets: Digital Custody Inc. (DCI), which it bought for $10m to CoinList for a significant markdown of $500,000, with the financing provided by DCI’s original CEO and seller, Terence J. Culver. 

According to FTX’s legal filing, DCI was acquired to offer custodial services for FTX U.S. and LedgerX. However, DCI was not fully integrated into the FTX ecosystem before former CEO Sam Bankman-Fried filed for bankruptcy in November 2022, three months after acquiring DCI. DCI was purchased by FTX as a subsidiary in two $5 million transactions in Dec. 2021 and Aug. 2022.

FTX’s legal team also clarified that since FTX U.S. hasn’t been restarted, Digital Custody Inc. holds little value for the estate. They state, “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..”

However, DCI still holds a custodial license from the South Dakota Division of Banking. After evaluating three offers, including one from Culver, the Debtors selected the buyer based on a better offer, the capability to complete the sale quickly, and a beneficial relationship with Mr. Culver, which is believed to facilitate regulatory approval swiftly.

Related: Sam Bankman-Fried to return to court for hearing over legal representation

FTX’s legal team mentions that both the Committee and the Ad Hoc Committee of Non-US Customers of FTX.com approved the transaction. However, as part of the agreement, FTX has the option to seek a superior offer for DCI until three days before the closing. If the buyer fails to complete the deal, a reverse termination fee of $50,000 will be imposed.

The defunct cryptocurrency exchange FTX has clarified that its restructuring plans did not include a “reboot” of the firm but focused on repaying customers in total. In a Jan. 31 court hearing, FTX lawyer Andy Dietderich emphasized that despite extensive efforts, there is no plan to relaunch FTX, referred to as FTX 2.0, within the current Chapter 11 bankruptcy plan.

Prior to this, numerous FTX users asked a U.S. bankruptcy judge to prevent the collapsed crypto exchange from assessing their cryptocurrency deposits using 2022 prices. They claimed this approach prevented them from benefiting from the recent surge in crypto prices.

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Source: Cointelegraph