FTX Debtors Assets, led by CEO John Ray III, has filed to sell another of its assets, Digital Custody Inc. (DCI). FTX purchased the subsidiary in two $5 million transactions in December 2021 and August 2022. However, the company would be sold to CoinList for just $500,000, with funding provided by DCI’s original CEO and seller, Terence J. Culver.
FTX’s lawyers explain in the filing that it purchased DCI to provide management services to FTX.US and LedgerX. However, the company was never officially integrated into the FTX ecosystem before former CEO Sam Bankman-Fried filed for bankruptcy three months later in November 2022. DCI purchase has been confirmed.
The lawyers also explained that the failure to restart FTX.US means DCI is essentially worthless in the estate, adding, “Given that the Debtor has sold LedgerX, DCI is no longer useful to the Debtor’s business and the Debtor Sell your FTX US or start over.”
However, DCI holds a license from the South Dakota Department of Banking to provide custody services. After receiving offers from three interested parties, including Mr. Culver, the Debtors “…selected a buyer based on a superior offer, the ability to execute a sales transaction in a short period of time, and his relationship with Mr. Culver.” “It helps buyers quickly obtain regulatory approval for sales transactions.”
FTX’s lawyers point out that both the Commission and FTX.com’s Non-U.S. Customer Special Committee approved the deal, but as part of the deal, FTX must find a better offer for DCI no later than three days before the deadline. If the buyer is unable to close the transaction, a $50,000 reverse termination fee will apply.
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