FTX to Sell $744M in Trust Assets: Is the Crypto Market at Risk?

FTX, cryptocurrency exchange that recently filed for bankruptcy, has requested permission from a Delaware court to liquidate trust assets owned by Grayscale and Bitwise, amounting to a total value of $744 million. Their aim is to settle outstanding bills in US dollars and, if possible, sell these trust assets at a discounted rate.

FTX and its debtors argue that selling these trust assets to one or more buyers could lead to cost savings and spare them from dealing with multiple individual requests for each proposed sale, streamlining the overall process.

Understanding the Strategy

This legal maneuver traces its origins back to a lawsuit initiated by FTX and Alameda Research, associated debtors, against Grayscale Investments in March. The lawsuit sought the release of funds earmarked for shareholders of the Grayscale Bitcoin and Ethereum Trusts.

The combined worth of the trust assets under consideration comprises approximately $691 million, spread across five Grayscale Trusts, along with an additional $53 million under Bitwise’s management. These figures are calculated based on market values as of November 6, 2023. These trusts provide investors with an indirect way to participate in digital assets without owning them directly.

Also Read: FTX Claim Prices Triple, Bankruptcy Becomes Profitable!

FTX’s Market Moves

Recently, the FTX estate made a substantial move by transferring 750,000 Solana (SOL) tokens, valued at around $30 million, to cryptocurrency exchanges Binance and Kraken. This action, potentially indicating an impending sale, led to a 5% reduction in SOL’s price within 24 hours.

Over a series of transactions, the FTX estate has shifted a total of $102 million worth of SOL to various exchanges. This process has created substantial selling pressure on the token, which constitutes a significant asset on the FTX estate’s balance sheet, with a total value exceeding $1.16 billion.

Despite the recent dip, SOL has displayed robust performance, witnessing nearly a 70% increase in value over the past month.

Bankman-Fried Under Fire

In a verdict reached last week, Sam Bankman-Fried, the founder of FTX, was subjected to a jury trial and found guilty on seven counts, encompassing wire fraud and money laundering.

Also Read: Sam Bankman-Fried Convicted on All Charges, But What About His Partners In Crime?

He may potentially face a lengthy prison sentence, estimated to be as long as 115 years, although experts anticipate a more realistic range of 15 to 20 years. The outcome of this legal battle carries significant implications for both Sam Bankman-Fried and the future of FTX.