The FTX debtors’ estate, under the leadership of CEO John Ray III, has submitted an application to sell Digital Custody to CoinList at a substantial reduction of $500,000, with funding provided by Digital Custody’s original CEO and seller, Terence Culver. FTX had originally acquired Digital Custody for $10 million.
As per FTX’s legal submission, the acquisition of Digital Custody was intended to provide custodial services for FTX US and LedgerX.
However, the integration of Digital Custody into the FTX ecosystem was incomplete when former CEO Sam Bankman-Fried filed for bankruptcy in November 2022, just three months after acquiring Digital Custody.
FTX had procured the company through two transactions of $5 million each in December 2021 and August 2022.
FTX has filed a motion to sell Digital Custody for $500,000, a significant markdown from the $10 million it was purchased for, to Terrence Culver, the individual who sold Digital Custody to FTX for $10 million.
A&M (UCC/Ad hoc agrees) says this reflects a fair price for the valuable license from South Dakota that allows it to provide custody.
FTX’s legal team also clarified that since FTX US hasn’t been restarted, Digital Custody holds little value for the estate.
It states, “DCI is 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 U.S..”
Nonetheless, Digital Custody retains a custodial license from the South Dakota Division of Banking.
After assessing three offers, including one from Culver, the debtors opted for the superior offer, considering its ability to swiftly complete the sale and the favourable relationship with Culver, which is anticipated to expedite regulatory approval.
FTX’s legal team indicated that both the committee and the ad hoc committee of non-U.S. customers of FTX.com endorsed the transaction.
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However, as part of the agreement, FTX reserves the right to seek a better offer for Digital Custody until three days before the closure.
Failure by the buyer to finalise the deal will incur a reverse termination fee of $50,000.
The now-defunct cryptocurrency exchange FTX has clarified that its restructuring plans do not involve a relaunch of the company but are focused on fully reimbursing customers.
During a court hearing on January 31, FTX lawyer Andy Dietderich stressed that despite exhaustive efforts, there are no plans to revive FTX.
Prior to this, numerous FTX users petitioned a U.S. bankruptcy judge to prevent the collapsed crypto exchange from valuing their cryptocurrency deposits using 2022 prices, claiming that this approach deprived them of the recent surge in crypto prices.
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