FTX Offloads Digital Custody Inc. with 95% Price Cut

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FTX plans to sell its subsidiary Digital Custody Inc for 20 times less than the purchase price.

Sold Digital Custody Inc to CoinList for $500,000, a fraction of the original acquisition cost.

In the volatile cryptocurrency space, where fortunes can be made or lost at the whim of market fluctuations, FTX is navigating a dangerous situation.

FTX, once a dominant force in the cryptocurrency exchange space, now faces the specter of bankruptcy. FTX’s former empire is collapsing under financial strain.

John J Ray III, CEO of FTX Debtor Assets, began selling Digital Custody to CoinList at a hefty price cut of $500,000.

This is in stark contrast to FTX’s sharp 95% decline in value compared to its initial $10 million investment in the Digital Custody acquisition in 2021.

Digital Custody was originally envisioned as a cornerstone asset for FTX’s custodial services, specifically its US operations, FTX US and LedgerX.

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However, with FTX US yet to resume operations and LedgerX being sold, the relevance of Digital Custody to FTX’s current business strategy has significantly diminished.

FTX’s restructuring advisor, Alvarez & Marshal, defended the fairness of the sale price, citing general market conditions and the licensing agreement. Despite these claims, creditors remain skeptical and concerned about the impact of FTX’s restructuring plan on cryptocurrency asset prices.

The decision to sell Digital Custody to CoinList was made after evaluating several proposals, with key considerations being the ability to complete the sale quickly and establish a friendly relationship with Digital Custody’s CEO, Terence Culver.

Culver’s participation is believed to accelerate regulatory approvals, which are critical to navigating the complex landscape of cryptocurrency regulation.

However, investor anxiety continues as questions are raised about Coinlist’s financial stability in light of past controversies such as large-scale KYC deletion.

As FTX continues its restructuring efforts and bankruptcy proceedings, speculation abounds about the potential impact on cryptocurrency markets.

Of particular concern to cryptocurrency holders is the proposed plan to liquidate a significant portion of FTX cryptocurrency assets, a move that could potentially impact asset prices across the board. As creditors prepare to vote on the proposed plan, the future of FTX and its impact on the broader cryptocurrency ecosystem remain uncertain.