The defunct FTX crypto exchange is offloading one of its recently acquired business units for a tiny fraction of what it originally paid.
According to court documents filed this week, Digital Currency Custody Inc. (DCI) will be sold to token platform CoinList for only $500,000. FTX had purchased the custodial services provider in August 2022 for $10 million.
- FTX paid $10 million for DCI less than six months before bankruptcy.
- The unit was meant to support FTX.US and LedgerX operations.
- With exchange collapse, DCI is deemed no longer useful.
- CoinList is buying DCI for just $500,000.
FTX bought DCI and its licensing capabilities in August 2022 to bolster its US exchange and LedgerX derivatives business. However, DCI was never integrated into either platform before the exchange’s trouble began in November.
FTX believes DCI is no longer useful
With FTX.US shutting down and LedgerX already sold off, the firm now deems DCI’s services outdated. “DCI is also no longer useful to the Debtors’ business given the Debtors’ sale of LedgerX and that it is unlikely for the Debtors to sell or restart FTX US,” the bankruptcy filing states.
The exchange will sell DCI to tokenized securities platform CoinList, where Culver will provide financing via convertible notes. The purchase price is just $500,000, or 5% of what the exchange originally paid. There will be no auction and FTX will consider higher bids up until 3 days before a court hearing to approve the sale.
Sam Bankman-Fried’s exchange says CoinList’s bid makes sense given Culver’s experience securing DCI’s South Dakota custody license and CoinList’s ability to close quickly. The sale includes a $50,000 break-up fee if it falls through.
Selling DCI for a tiny fraction of its purchase price underscores the level of capital destruction stemming from FTX’s collapse.