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FTX Sells Digital Custody for Fraction of Initial Price

FTX Sells Digital Custody to CoinList for $500,000

In a recent chapter of the FTX saga, the bankrupt cryptocurrency exchange has taken decisive steps to liquidate its assets, announcing the sale of Digital Custody to CoinList for $500,000, a fraction of its initial purchase price of $10 million. This decision comes as FTX, under the leadership of John Ray III, seeks to maximize the value of its indebted assets and repay its creditors in an increasingly unpredictable market.

Digital Custody Loses Value and Becomes an Excess Asset

FTX initially acquired Digital Custody to expand its custody services for its operations in the United States, making two transactions of $5 million each in December 2021 and August 2022. However, prior to Sam Bankman-Fried declaring bankruptcy in November 2022, Digital Custody was not fully integrated into the FTX ecosystem, thus limiting its value to the struggling company.

Acquired with the intention of providing custody services for FTX US and LedgerX, Digital Custody now finds itself on the sidelines of FTX’s restructuring strategy, primarily due to the cessation of FTX US operations and the sale of LedgerX. While Digital Custody holds a custody license from the South Dakota Banking Division, which was a potential asset, it was insufficient to justify its retention in FTX’s declining asset portfolio.

Despite an initial purchase price of $10 million and the sought-after license, the sale of Digital Custody will only fetch $500,000 for FTX.

The Path to Liquidation

Terence Culver, the original CEO of Digital Custody, is financing the acquisition by CoinList, which could expedite the necessary regulatory approval. FTX considered three offers before choosing CoinList’s, prioritizing the speed of the transaction and the facilitation of regulatory approvals through the existing relationship with Culver.

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