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FTX’s 95% discount sale of Digital Custody Inc

TL;DR

  • FTX’s DCI sale at 95% off hints at strategic pivot.
  • FTX prioritizes debt repayment over FTX.US relaunch.
  • Sale reflects FTX’s adaptability amid regulatory scrutiny.

In a strategic move aimed at debt repayment, cryptocurrency exchange FTX has announced the sale of its subsidiary Digital Custody Inc. (DCI) to CoinList at a remarkable 95% discount. The decision comes as FTX abandons plans to relaunch its platform, FTX.US, opting instead to focus on reimbursing customer funds. 

The sale of DCI, initially acquired for $10 million in two transactions, reflects FTX’s efforts to alleviate mounting pressure from creditors and regulators.

Acquisition and abandonment of FTX.US relaunch plans

FTX’s acquisition of DCI, a trust company registered in South Dakota, was part of its vision to provide custodial services for cryptocurrencies and digital property, catering primarily to FTX US and LedgerX. 

The company completed the acquisition in two transactions, the first on December 21, 2021, and the second on August 6, 2022, with each valued at $5 million. However, the failure to secure sufficient investment for the relaunch of FTX.US prompted FTX to abandon its plans, rendering DCI redundant to its operations.

Liquidation Decision and Sale Process

With the discontinuation of FTX.US, DCI’s value as an asset diminished significantly, leading to FTX’s decision to liquidate it. The company received offers from three interested parties for the sale of DCI, including its former CEO, Terence J. Culver. However, FTX selected CoinList as the purchaser based on its ability to expedite the transition process. CoinList will finance the acquisition and related operations through a convertible note from Culver.

Financial implications and debt repayment strategy

The sale of DCI at a substantial discount of 95%, for just $500,000, underscores FTX’s commitment to addressing its financial obligations. By divesting DCI, FTX aims to generate liquidity to repay debts amid increasing scrutiny from creditors and regulatory authorities. 

The decision reflects the pragmatic approach of FTX’s leadership, led by CEO John Ray III, to streamline operations and prioritize financial stability.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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Emman Omwanda

Emmanuel Omwanda is a blockchain reporter who dives deep into industry news, on-chain analysis, non-fungible tokens (NFTs), Artificial Intelligence (AI), and more. His expertise lies in cryptocurrency markets, spanning both fundamental and technical analysis.

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