FTX has received court approval to sell certain investment assets and subsidiaries.
Collectively, via various subsidiaries, FTX and Alameda spent around $5.3 billion across 473 investments, according to a report from The Block Research. Investments ranged from huge checks — such as $100 million into Mysten Labs, the developer of the Sui blockchain — to many smaller investments, such as $1 million checks into startups Limit Break and Messari.
Liquidators for the exchange filed a motion on Jan. 18, which said that some investees had expressed a strong motivation to repurchase FTX’s interests to facilitate raising additional capital from other investors.
The U.S. bankruptcy court for the district of Delaware approved the motion on Feb. 13, authorizing the sale or transfer of certain assets of “relatively de minimis value” compared to FTX’s total asset base. The initial motion from FTX said that around 185 investments were made for $1 million or less.
“De minimis” assets
The order authorizes and approves the sale or transfer of investments in privately or publicly held companies — including warrants, tokens and token warrants, shares, promissory notes, future equity interests and future token interests. It also allows for the sale or transfer of subsidiaries and other related interests, including limited partnership interest in venture capital and other investment funds.
Alameda and FTX invested around $837 million into 32 unique investment funds — including Sequoia, Multicoin and Kraken Ventures.
“The Debtors shall at least on a weekly basis notify the firms serving as legal counsel and lead financial advisor to the Official Committee (the “Consulting Professionals”) and the U.S. Trustee of the status of any potential sales or transfers of De Minimis Assets or Fund Assets, including the receipt by the Debtors of any offers and entry into or consummation of any Sales with respect thereto,” the filing said.
The approved sale procedures require that the aggregate selling price of each asset is less than or equal to $1 million and that the “confirmed investment value” — which refers to the initial amount paid by FTX to acquire or invest in the asset — is less than or equal to $5 million. For the sale of fund assets, the initial capital committed and aggregate selling price must equal or be less than $1 million.
Investee entities will have five days to file an objection to the sale, the filing said. If no objection is received, FTX liquidators will proceed with the transaction without further order from the court.
U.S. bankruptcy judge John Dorsey signed the court order on Feb. 13.
Disclaimer: Beginning in 2021, Michael McCaffrey, the former CEO and majority owner of The Block, took a series of loans from founder and former FTX and Alameda CEO Sam Bankman-Fried. McCaffrey resigned from the company in December 2022 after failing to disclose those transactions.
© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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