FTX plans to sell a $10 million subsidiary it purchased to CoinList for $500,000
The FTX Debtors’ estate has put CoinList up for a mere half a million dollars in exchange for the subsidiary Digital Custody Inc., which it had bought for a grand total of $10 million by August 2022.
Under the leadership of CEO John Ray III, the FTX Debtors estate has just filed to sell Digital Custody Inc. (DCI), one of its assets. Terence J. Culver, the original CEO and seller of DCI, would finance the sale of the firm to CoinList for just $500,000, despite the fact that FTX had bought the subsidiary in two $5 million transactions in December 2021 and August 2022.
Legal representation for FTX states in the filing that the acquisition of DCI was for the purpose of providing custodial services for FTX.US and LedgerX. However, the firm was never officially integrated into the FTX ecosystem until November 2022, three months following the acquisition of DCI, when former CEO Sam Bankman-Fried declared bankruptcy.
The attorneys further add, “DCI is also no longer helpful to the Debtors’ company given the Debtors’ sale of LedgerX and that it is improbable for the Debtors to sell or restart FTX US.” This is to say that because the Debtors did not restart FTX.US, DCI is basically useless to the estate.
Nevertheless, DCI is able to provide custodial services because of a license it obtained from the South Dakota Division of Banking. Subsequent to receiving proposals from three interested parties, one of which was Culver, the Debtors selected the purchaser “…on the basis of its superior offer, capability to promptly execute the Sale Transaction, and association with Mr. Culver, which the Debtors believe will facilitate the Purchaser’s expeditious acquisition of regulatory approval for the Sale Transaction.”
Both the Committee and the Ad Hoc Committee of Non-US Customers of FTX.com accepted the sale, according to FTX’s attorneys. However, the arrangement stipulates that FTX must find a superior offer for DCI no later than three days before closure. Under no circumstances will the buyer be exempt from paying the $50,000 reverse-termination charge.