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FTX Exchange Asset Liquidation Strategy for Client Reimbursement

Jun 3, 2024

FTX crypto exchange is presently engaged in liquidating assets to reimburse its former clients, involving the sale of its remaining shares in the artificial intelligence entity, Anthropic. The sale of 15 million Anthropic shares at a price of $30 per share generated a revenue exceeding $452 million. Notably, G Squared, a venture capital firm, acquired approximately one-third of these shares for $135 million. Other purchasers included Fund FG-BLU, hedge funds, and financial organizations, contributing to a total revenue of $1.3 billion from the Anthropic shares sale.

In 2021, FTX and Alameda jointly invested $500 million to secure an 8% interest in Anthropic. This investment turned out to be highly profitable, as FTX made over $800 million in earnings due to the appreciating value of the shares.

In addition to the sale of Anthropic shares, the estate is divesting other assets like real estate properties purchased by FTX prior to its insolvency. A bankruptcy expert indicated that the bankruptcy proceedings of FTX have resulted in expenses exceeding $700 million, encompassing legal and administrative costs accumulating since the collapse of the exchange. Alvarez & Marsal, a consulting firm, invoiced a total of $212 million for their services, while FTX's legal counsel submitted a bill of $202 million. Moreover, CEO John Ray invoiced the estate a total of $5.6 million since the commencement of the bankruptcy proceedings.

Following the downfall of FTX, the estate is systematically liquidating assets, including interests in technology companies, real estate properties, and previous investments made by FTX before filing for bankruptcy. The primary objective of the liquidators is to optimize the value obtained from these transactions to overcome the financial shortfall. The ongoing asset liquidation underscores the intricate challenges faced by the FTX bankruptcy estate in adequately compensating creditors and managing the significant expenses associated with the proceedings.

Notably, investors of FTX exchange recently indicated their willingness to withdraw a lawsuit against Sam Bankman-Fried if he cooperates in legal proceedings against celebrities who endorsed the exchange.

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