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Court Grants FTX Authorisation to Liquidate Grayscale

The now-bankrupt crypto exchange FTX has been granted approval to liquidate approximately $873 million worth of trust assets in an effort to compensate creditors impacted by the exchange’s collapse in 2022.

FTX Logo behind bitcoin token

According to a filing made on Nov. 29 in a Delaware bankruptcy court, these assets consist of FTX’s holdings in trusts issued by Grayscale Investments, valued at $807 million, and Bitwise, a custody service provider, valued at $66 million.

The filing stated, “The debtors are authorized, but not directed, to execute sales of the trust assets, in their reasonable business judgment, following the provided sale procedures.”

While the court document mentions a total of $744 million in assets as of Oct. 25, 2023, the current valuation has significantly increased since then.

In the recent court filing on Tuesday, Galaxy, a crypto investment firm, was additionally empowered by the court to assist FTX in liquidating its trust assets. FTX had previously engaged Galaxy earlier this year to manage the extensive digital asset holdings within the estate.

FTX’s trust assets include shares in various Grayscale funds, such as the Grayscale Bitcoin Trust (GBTC) and a Bitwise crypto index fund.

Currently, these trust holdings potentially amount to about $873 million due to the diminished discount between GBTC’s net asset value and its market price amidst the recent surge in Bitcoin. Based on shareholdings from the court filing and Wednesday’s closing prices via TradingView data, there’s an approximate 17% increase since October 25. This surge aligns with the recent upward trend in cryptocurrency prices.

FTX’s administrators, led by John J. Ray III, have been diligently recovering assets since the downfall of Sam Bankman-Fried’s former enterprise in November 2022.

To date, approximately $7 billion in assets has been recovered, nearly half of which ($3.4 billion) is in cryptocurrencies.

In June, FTX’s debtors estimated the misappropriated total of customer assets at $8.7 billion.

Meanwhile, Sam Bankman-Fried faced seven fraud-related charges, resulting in a conviction on November 2. His sentencing is scheduled for March 28.

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