FTX Bankruptcy Advisors Approved to Sell Grayscale and Bitwise Trust Assets
The bankruptcy saga of FTX continues as the advisors for the collapsed crypto exchange have received court approval to sell assets held in digital trusts from Grayscale and Bitwise. These assets are collectively valued at nearly $873 million as of today. FTX holds shares in five Grayscale trusts, including Bitcoin Trust (GBTC), Ethereum Trust (ETHE), Ethereum Classic Trust (ETCG), Litecoin Trust (LTCN), Digital Large Cap Trust (GDLC), and the Bitwise 10 Crypto Index Fund.
The purpose of selling these trust shares is to recover funds to repay creditors, including exchange customers. The value of these shares has increased from $744 million to $873 million due to the recent rise in the value of assets like Bitcoin and Ethereum.
Grayscale’s publicly traded trusts allow investors to gain exposure to cryptocurrencies without actually owning the underlying assets. For example, Grayscale holds nearly $24 billion worth of Bitcoin for its Grayscale Bitcoin Trust.
Historical Performance of GBTC and Other Trusts
While the price of GBTC and other trusts fluctuates like that of the represented assets, they have not historically been aligned. GBTC traded at a premium over the price of actual Bitcoin for many years but fell to a discount in early 2021. This discount widened significantly, peaking at 49% in late 2022, but has recently shrunk to just above 8% as of today.
Grayscale’s Plan for a Bitcoin ETF
Grayscale is one of the firms attempting to operate a Bitcoin spot exchange-traded fund (ETF) in the United States. However, the Securities and Exchange Commission (SEC) has yet to approve any such application. Grayscale intends to convert its Bitcoin Trust into a proper Bitcoin ETF.
In August, the company won a court ruling against the SEC, which had been stalling the decision to review Grayscale’s Bitcoin ETF application. The court ruled that the agency must review and consider the application, though the SEC has yet to make a decision on any Bitcoin ETF. A SEC memo shows that the agency recently met with Grayscale principals to discuss.
Hot Take: FTX’s Asset Sale Could Impact Crypto Market
The approval for FTX’s bankruptcy advisors to sell Grayscale and Bitwise trust assets could have implications for the crypto market. As these assets are sold off, it may lead to increased selling pressure on cryptocurrencies like Bitcoin and Ethereum, potentially impacting their prices. Additionally, investors in these trusts may be concerned about the impact of the asset sales on their holdings. The outcome of FTX’s bankruptcy proceedings will be closely watched by industry participants as it navigates through this challenging period.
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