In a recent development within the cryptocurrency sector, the beleaguered exchange FTX has arranged to offload its subsidiary, Digital Custody Inc. (DCI), to the blockchain platform CoinList for only $500,000. This transaction is a stark contrast to the $10 million FTX expended to procure DCI less than a year ago, marking a 95% depreciation and underscoring the dramatic downturn of the exchange’s fortunes.

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• FTX, once a leading cryptocurrency exchange, sells subsidiary Digital Custody Inc. To CoinList for $500,000—a significant drop from its original $10 million purchase price.
• The sale is part of FTX’s efforts to liquidate assets and pay back creditors following its bankruptcy filing in November 2022 due to a liquidity crisis.
• Despite reduced operations, DCI holds a valuable South Dakota custody license, making it a strategic asset for CoinList, with the sale allowing for higher bids until three days before the court hearing.

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FTX Divests Digital Custody Division for $500,000, a Steep Decline from Previous $10 Million Valuation

FTX, which spiraled into bankruptcy in November 2022 following a liquidity crisis and concerns over financial irregularities, had originally acquired DCI from Digital Finance Group and CEO Terrence Culver on August 6, 2022. The acquisition aimed to bolster FTX’s custodial services, particularly for its American operations, FTX.US, and LedgerX. However, the subsequent collapse prevented the integration of DCI into these services.

Despite its reduced operations, DCI retains value due to its existing South Dakota custody license, which remains an attractive asset for CoinList. The expedited sale to CoinList, facilitated by Terrence Culver’s financial support via convertible notes, bypasses the need for an auction. This strategic decision is driven by the urgency to settle creditor claims and streamline FTX’s asset portfolio.

FTX’s intent to manage its debts includes selling holdings in various ventures, notably an artificial intelligence firm, Anthropic, which received a significant investment from FTX and its affiliated investment company, Alameda Research. The DCI sale, while currently set at $500,000, is open to superior bids until three days before the formal court hearing to approve the transaction.

As FTX maneuvers through its bankruptcy proceedings, the sale of DCI is indicative of its broader strategy to curtail further financial hemorrhaging and satisfy creditor demands. The unfolding situation at FTX is being vigilantly observed by market participants for signs of potential recuperation of assets.

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