After months of consideration, FTX has decided to forgo any plans of restarting the exchange following the bankruptcy process. The company’s legal representatives have made it clear that FTX will instead dissolve once all debts are settled. While the full repayment of creditors is not yet guaranteed, it remains an achievable goal according to Andrew Dietrich, one of the lawyers handling the case. Creditors will only be entitled to the dollar value of their crypto holdings, leaving some investors disappointed as the value of these assets has increased since FTX’s collapse.
As part of the dissolution process, FTX has been making moves to settle its debts and tie up loose ends. One such move involves the sale of Digital Custody Inc., an FTX-owned entity based in Delaware with a South Dakota license for custody of digital assets. CoinList has agreed to acquire Digital Custody for $500,000, with the funds being provided by CoinList’s CEO, Terrence Culver. Interestingly, Culver was the original seller of Digital Custody to FTX for $10 million through two separate transactions.
The decision to sell off assets like Digital Custody is in line with FTX’s plan to wind down its business operations once all debts are cleared. In the words of the company’s legal team, “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.” This strategic move aims to streamline costs and maximize value for the benefit of FTX’s estates. The committees representing non-US creditors of FTX have approved the sale, giving the company the green light to proceed.
While the sale of Digital Custody to CoinList has been agreed upon, FTX is still open to exploring better deals until shortly before the scheduled date of the sale. In the event that the buyer withdraws from the deal, a reverse termination fee of $50,000 will be levied. This flexibility allows FTX to seek the most advantageous terms possible as it navigates the final stages of its bankruptcy proceedings.
Ultimately, the decision to dissolve FTX marks the end of an era for the once-prominent exchange. As the company settles its debts and closes its doors for good, investors and stakeholders are left to reflect on what could have been. Despite the disappointment of not seeing FTX restart its operations, the legal and financial steps taken by the company reflect a commitment to honoring its obligations and maximizing value in a challenging situation.