FTX’s Digital Custody Sold for a Steal: CoinList Snags Bargain in Bankruptcy Fire Sale

Key Takeaways

• FTX seeks to sell Digital Custody Inc. (DCI) to Coinlist for a significantly lower price than its original purchase price.
• DCI never became operational within FTX US or Ledgerx before the bankruptcy filing.
• The proposed sale showcases FTX’s effort to optimize its financial estate and increase the recovery for creditors and stakeholders.

FTX Trading Ltd. and its affiliates have outlined a strategy to sell an acquired subsidiary, originally purchased for $10 million, to Coinlist for $500,000.

This proposal, documented in court filings  on February 9, 2024, with the United States Bankruptcy Court for the District of Delaware, aims to optimize the financial returns for creditors and stakeholders within the framework of FTX’s ongoing bankruptcy process.

Subsidiary Sale to Coinlist for $500K Amid Bankruptcy Proceedings

Under the leadership of new CEO and Chief Restructuring Officer John Ray III, FTX, the cryptocurrency exchange now navigating bankruptcy, is looking to divest a previously acquired subsidiary for a fraction of its purchase price.

The entity in question, Digital Custody Inc. (DCI), was acquired for $10 million but is now on the sales block to Amalgamated Token Services Inc., operating as Coinlist, for $500,000. The funding for the purchase was secured by DCI’s original CEO and seller, Terence Culver.

DCI Holds Minimal Value

The legal representatives of the company outlined  that Digital Custody Inc. (DCI) holds minimal value for the bankruptcy estate, attributing this to the sale of LedgerX  and the improbability of relaunching or selling FTX US. “Given these developments, DCI no longer aligns with the operational needs or future strategies of the Debtors,” the legal team stated .

Despite minimal operations, DCI is still considered to hold valuable franchise potential, indicating a strategic disposal to maximize creditor value amidst FTX’s restructuring efforts.

The bankrupt entity’s lawyers commented :

“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.”

FTX Files for Court Approval on Strategic Asset Sale as Part of Financial Rehab Plan

The bankruptcy documentation  highlights the strategic rationale behind the proposed sale, focusing on optimizing the estate’s value for creditors and stakeholders. It details the methodical approach and legal basis for the sale initiative.

Assisted by their financial advisor, Alvarez & Marsal North America, LLC, the debtors implemented a targeted marketing strategy for the assets. This strategy involved the development of a bespoke list of potential buyers and proactive outreach to these selected parties, the court filing elucidates.

In its latest court filing,  FTX Trading Ltd. and its affiliates request judicial consent for a pivotal transaction aimed at bolstering their financial restructuring and reorganization. The proposed sale of Digital Custody Inc. (DCI) is framed as a deliberate move to liquidate assets beneficially for creditors.

This action aligns with FTX’s broader divestiture strategy, including the planned sale of its stake in Anthropic, valued at approximately $1.4 billion, underscoring the company’s commitment to optimizing its estate for stakeholder recovery.

About the Author

Teuta Franjkovic

Teuta is a seasoned writer and editor with more than 15 years of experience. She has expertise in covering macroeconomics and technology as well as the cryptocurrency and blockchain industries. She has worked for several publications as a journalist and editor, including Forbes, Bloomberg, CoinTelegraph, Coin Rivet, CoinSpeaker, VRWorld and Arcane Bear. Teuta began her professional career in 2005, working as a lifestyle writer at Cosmopolitan in Croatia. From there, she branched out to several other publications, covering mainly business and the economy. She then turned her attention to the world of cryptocurrency and blockchain, believing that crypto is among the most important inventions in the history of humanity. Her involvement in fintech began in 2014 and she has since lent her expertise in writing, editing and gathering information about the world of crypto, blockchain, NFTs and Web3. An all-round news hound, mentor, editor, and writer, Teuta enjoys teamwork and good communication. She holds a WSET2 diploma and has a thing for chablis, punkrock music and shoes. She also holds a double MA in Political science and Entrepreneurship.

See more

[email protected] LinkedIn Twitter