After a prolonged period of considering the possibility of restarting FTX Exchange following the bankruptcy process, lawyers for the defunct exchange have now revealed that this plan has been completely abandoned. Instead, FTX will dissolve entirely once all outstanding debts have been settled. This decision has disappointed investors, as they had hoped for a potential revival of the exchange.
Andrew Dietrich, one of the lawyers representing FTX in the court case, emphasized that the objective is to repay creditors in full. Although this goal is not yet guaranteed, it is considered to be an attainable outcome. However, creditors will only receive the dollar value of their crypto holdings, which may be a disappointment considering the increased value of these assets since the exchange’s collapse.
While investors may be disheartened, it is worth noting that the increased value of the assets is the very reason why full refunds can be offered in the first place. Importantly, this solution complies with bankruptcy law and demonstrates the commitment of FTX Exchange to resolving its financial obligations.
As FTX Exchange’s legal team approaches the final stages of calculating the funds to be distributed, they have secured a deal to sell off Digital Custody Inc., one of FTX’s assets. CoinList, a digital asset firm, will be acquiring Digital Custody Inc. for a nominal sum of $500,000. The funds for this transaction will be provided by CoinList’s CEO, Terrence Culver. However, there is a noteworthy twist to this deal.
Terrence Culver, the CEO of CoinList, is the same individual who initially sold Digital Custody Inc. to FTX Exchange for a total amount of $10 million. This sale was conducted in two separate transactions, each worth $5 million, which took place in December 2021 and August 2022. At the time, FTX US acquired Digital Custody Inc. to enhance its custody services for its own assets as well as those of its clients. However, with FTX now winding down its operations, asset custody is no longer a priority.
The committees representing non-US creditors of FTX Exchange have given their consent for the sale of Digital Custody Inc. As FTX continues to explore potential deals before the sale date, they have the opportunity to secure an even more favorable agreement. However, in the event that the buyer withdraws from the deal, a reverse termination fee of $50,000 will be collected. This provision serves to safeguard against any potential setbacks in the sale process.
FTX Exchange has made the definitive decision to dissolve once all outstanding debts have been paid off. While investors may have hoped for a different outcome, the commitment to repay creditors in full demonstrates the responsible approach taken by FTX Exchange. The sale of Digital Custody Inc. to CoinList, with the involvement of its CEO Terrence Culver, further facilitates the resolution of FTX’s financial obligations. As the process nears its conclusion, FTX Exchange can continue to pursue advantageous deals, allowing for the maximization of value for the benefit of all parties involved.