FTX Granted Court Approval to Sell Assets from Grayscale and Bitwise Trusts

One sentence summary – FTX, a struggling cryptocurrency exchange, has been given court approval to sell assets from digital trusts managed by Grayscale and Bitwise, which have a combined value of nearly $873 million, in order to repay its creditors, including exchange customers. The value of these trust shares has increased due to the recent appreciation of assets like Bitcoin and Ethereum, and Grayscale is currently seeking approval to operate a Bitcoin spot exchange-traded fund (ETF) in the US, although the SEC has not yet approved any Bitcoin ETF applications.

At a glance

  • FTX has been granted court approval to sell assets from digital trusts managed by Grayscale and Bitwise.
  • The assets held in these trusts have a combined value of nearly $873 million.
  • FTX currently holds over 32 million shares across five Grayscale trusts and the Bitwise 10 Crypto Index Fund.
  • This court approval allows FTX to sell these trust shares to repay its creditors, including exchange customers.
  • The value of these shares has seen a significant increase since October, rising from $744 million to almost $873 million, largely due to the appreciation of assets like Bitcoin and Ethereum.

The details

FTX, a cryptocurrency exchange on the brink of bankruptcy, has been granted court approval to sell assets from digital trusts managed by Grayscale and Bitwise.

The assets held in these trusts have a combined value of nearly $873 million.

FTX currently holds over 32 million shares across five Grayscale trusts and the Bitwise 10 Crypto Index Fund.

This court approval allows FTX to sell these trust shares to repay its creditors, which include exchange customers.

Since October, the value of these shares has seen a significant increase, rising from $744 million to almost $873 million.

This increase in value is largely due to the recent appreciation of assets such as Bitcoin and Ethereum.

Grayscale’s trusts provide investors with exposure to cryptocurrencies without the need for them to directly own the underlying assets.

Grayscale itself holds a significant amount of the respective crypto assets for each trust.

For example, it currently holds nearly $24 billion worth of Bitcoin for its Grayscale Bitcoin Trust.

Historically, the price of Grayscale’s trusts, including GBTC, has not always mirrored the price of the represented assets.

GBTC, for instance, traded at a premium compared to the price of Bitcoin for several years.

However, in early 2021, it began trading at a discount, with the discount peaking at 49% in late 2022.

Recently, this discount has decreased to slightly above 8%.

Grayscale is also actively seeking approval to operate a Bitcoin spot exchange-traded fund (ETF) in the United States.

However, the Securities and Exchange Commission (SEC) has not yet approved any Bitcoin ETF applications, including Grayscale’s.

In August, Grayscale won a court ruling that forced the SEC to review its Bitcoin ETF application.

Despite this, the SEC has not made a decision on any Bitcoin ETF applications.

The SEC recently held discussions with Grayscale principals regarding the matter.

Article X-ray

A courtroom gavel smashing a piggy bank labeled “Grayscale” and “Bitwise” with money flying out.

This section links each of the article’s facts back to its original source.

If you have any suspicions that false information is present in the article, you can use this section to investigate where it came from.

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– FTX’s bankruptcy advisors have received court approval to sell assets held in digital trusts from Grayscale and Bitwise.
The assets held in the trusts are collectively valued at nearly $873 million.
– FTX holds more than 32 million shares split between five Grayscale trusts and the Bitwise 10 Crypto Index Fund.
The bankruptcy court filing allows FTX to sell the trust shares to repay creditors, including exchange customers.
The shares were valued at $744 million in October but are now worth nearly $873 million due to the recent rise in value of assets like Bitcoin and Ethereum.
– Grayscale’s trusts allow investors to gain exposure to cryptocurrencies without owning the underlying assets.
– Grayscale holds a substantial amount of the underlying crypto asset for each trust, such as nearly $24 billion worth of Bitcoin for its Grayscale Bitcoin Trust.
The price of GBTC and other trusts has historically not been aligned with the price of the represented assets.
– GBTC traded at a premium over the price of Bitcoin for many years but fell to a discount in early 2021.
The discount widened significantly, peaking at 49% in late 2022, but has recently shrunk to just above 8%.
– Grayscale is attempting to operate a Bitcoin spot exchange-traded fund (ETF) in the United States.
The SEC has yet to approve any Bitcoin ETF applications, including Grayscale’s.
– Grayscale won a court ruling in August that required the SEC to review its Bitcoin ETF application.
The SEC has not made a decision on any Bitcoin ETF, but recently met with Grayscale principals to discuss.

 

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