FTX plans to sell Digital Protection for $500,000 in bankruptcy proceedings
The estate of FTX Debtors, led by CEO John Ray III, has offered to sell Digital Protection to CoinList for a significant $500,000 markup, funded by DC CEO and seller Terence Culver. FTX originally purchased Digital Protection for $10 million.
According to FTX's legal filing, DC was acquired to provide security services to FTX US and LedgerX. However, DC was not fully integrated into the FTX ecosystem before former CEO Sam Bankman-Fried filed for bankruptcy in November 2022, three months after taking over. FTX acquired the company in two $5 million transactions in December 2021 and August 2022.
FTX to sell File Motion Digital Protection for $500k FTX bought for $10m to Terence Culver (DCI sold to FTX for $10m)
A&M (UCC/ad hoc agree) says this reflects fair value for the valuable license from South Dakota pic.twitter.com/QZ8XGVoHQ8
— Sunil (FTX Lending Champion) (@sunil_trades) February 10, 2024
FTX's legal team also explained that since FTX US has not relaunched, digital protection is more valuable to assets. It says, “DCI is no longer beneficial to the Debtors' business, considering the Debtors' sale of LedgerX and the Debtors' inability to sell or relaunch FTX US.”
However, DC still has a retainer license from the South Dakota Division of Banks. After evaluating three offers, including one from Culver, the debtors chose the best offer, the ability to complete the sale quickly and a valuable relationship with Culver, which is believed to facilitate faster regulatory approval.
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FTX's legal team noted that both the committee and the ad hoc committee of non-US customers of FTX.com approved the transaction. However, as part of the deal, FTX can seek a superior offer to DC three days prior to closing. If the buyer fails to complete the deal, a $50,000 reverse termination fee will be imposed.
The defunct cryptocurrency exchange FTX clarified that its restructuring plans do not include a relaunch of the company, but will instead focus on paying customers in full. At the court hearing on January 31, FTX's lawyer Andy Ditderich emphasized that despite many efforts, there are no plans to restart FTX.
Previously, several FTX users had asked a US bankruptcy judge to prevent the defunct crypto exchange from valuing their cryptocurrency deposits using the 2022 price. They said this approach has kept them from benefiting from the recent rise in crypto prices.
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