FTX Digital Custody Is Set For Sale To CoinList For $500,000

Key Points:

• FTX Debtors selling Digital Custody to CoinList for $500,000, down from $10 million.
• FTX Digital Custody unused post-Bankman-Fried’s bankruptcy.
• Hope for former FTX customers as lawyers expect full repayment amidst Bankman-Fried’s fraud case.

The FTX Debtors estate, under the leadership of CEO John Ray III, has initiated the sale of one of its assets, Digital Custody, as revealed by recent filings, The Block first reported the news.

Read more: FTX Collapse Connects To CFTC vs. Binance Event And Its Consequences

FTX Debtors Sell Digital Custody at Steep Discount

Originally acquired by FTX in two transactions totaling $10 million in December 2021 and August 2022, FTX Digital Custody is set to be sold to CoinList for $500,000, facilitated by financing from its former CEO, Terence Culver.

Despite its intended purpose of providing custodial services for FTX.US and LedgerX, Digital Custody never integrated into the FTX ecosystem before former CEO Sam Bankman-Fried filed for bankruptcy in November 2022. FTX’s legal representatives argue that the failure to revive FTX.US renders Digital Custody essentially worthless to the estate.

However, FTX Digital Custody still holds a license from the South Dakota Division of Banking, enabling it to offer custodial services. Following offers from three interested parties, including Culver, the sale to CoinList was chosen for its superior offer and its potential to swiftly obtain regulatory approval, leveraging Culver’s relationship.

FTX Digital Custody’s Fate Post-Bankruptcy

The transaction has received approval from both the Committee and the Ad Hoc Committee of Non-US Customers of FTX. Yet, the company has the option to explore better offers until three days before the closing, with a reverse-termination fee of $50,000 in place if the deal falls through.

Meanwhile, as Sam Bankman-Fried awaits sentencing for criminal fraud next month, there’s hope for former FTX customers to recover their losses.

Lawyers representing FTX’s bankruptcy estate anticipate full repayment to customers and creditors with legitimate claims, marking a positive turn for those impacted by FTX’s collapse in 2022. Bankman-Fried faces potential life imprisonment after being found guilty on seven criminal counts related to the disappearance of roughly $10 billion in customer funds.