CoinList to Acquire FTX’s Digital Custody Subsidiary in Cut-Price Deal

The FTX Debtors estate, under the leadership of CEO John Ray III, has initiated the process of selling Digital Custody Inc. (DCI) to CoinList.

FTX had previously acquired the subsidiary in two separate transactions, one in December 2021 and the other in August 2022, for a total of $10 million.

However, CoinList will now acquire DCI for a significantly reduced price of $500,000.

The financing for the deal will be provided by Terence J. Culver, the original CEO and seller of Digital Custody.

Digital Custody Never Integrated to FTX Ecosystem

According to FTX’s lawyers, the acquisition of DCI was intended to offer custodial services for FTX.US and LedgerX.

Unfortunately, due to former CEO Sam Bankman-Fried’s bankruptcy filing in November 2022, the integration of DCI into the FTX ecosystem never materialized, rendering the subsidiary essentially worthless to the FTX estate.

Despite its limited value to FTX, Digital Custody still holds a license from the South Dakota Division of Banking, allowing it to provide custodial services.

After receiving offers from three interested parties, including Culver, the Debtors selected CoinList as the preferred purchaser based on their superior offer, ability to complete the transaction quickly, and their existing relationship with Culver.

FTX file motion to sell Digital Custody for $500k which FTX bought for $10m to Terrence Culver (person who sold DCI to FTX for $10m)

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 pic.twitter.com/QZ8XGVoHQ8

— Sunil (FTX Creditor Champion) (@sunil_trades) February 10, 2024

The Debtors believe that CoinList’s association with Culver will be advantageous in expediting regulatory approval for the sale.

FTX’s lawyers have disclosed that both the Committee and the Ad Hoc Committee of Non-US Customers of FTX.com have approved the transaction.

However, as part of the agreement, FTX retains the right to consider more favorable offers for DCI up until three days before the closing of the deal.

A reverse-termination fee of $50,000 will be imposed if the purchaser fails to finalize the transaction.

FTX to Sell AI Startup Anthropic

Last week, FTX sought approval to sell its 8% stake in AI startup Anthropic Holdings.

In a motion filed by FTX’s current CEO, the exchange requested permission to sell the stake and proposes two possible procedures, including an auction or a private sale.

FTX also requested a shortened period for objections to be raised, with a court hearing scheduled for February 22 to expedite the deliberation process.

The precise price sought for the Anthropic shares has been redacted from the filing, as FTX’s legal team believes public disclosure could hinder the potential to obtain higher offers for the stake.

Anthropic Holdings achieved a reported valuation of up to $18 billion in December 2023, indicating that FTX’s 7.84% stake could be worth approximately $1.4 billion.

This value has sparked hope among victims of the FTX collapse, as FTX anticipates having sufficient funds to fully repay all customer and creditor claims.

Earlier this month, FTX also filed a motion in a Delaware court to sell its $175 million claim against bankrupt digital financial services firm Genesis Global Capital.

Currently, claims against Genesis are selling for 65% of their face value, significantly higher than the 38% that Alameda Research claims are fetching.