FTX Wins Court Approval to Sell $1 Billion Stake in AI Firm Anthropic
Summary:
The Delaware Bankruptcy Court has permitted FTX, a bankrupt crypto exchange, to sell over $1 billion of its shares in an AI startup called Anthropic. Despite initial objections from customers, the sale was approved on the condition that customers could claim money from the sale if they were affected. The money raised will be added to FTX's current bank reserve of $6.4 billion. Despite its insolvency, FTX plans to repay all creditors based on cryptocurrency rates dating back to over 15 months ago.
The bankruptcy court has given the green light to troubled cryptocurrency platform FTX to liquidate more than $1 billion of its equity in AI startup Anthropic. During a hearing on February 22, Judge John Dorsey of the Delaware Bankruptcy Court declared the sale permissible, given FTX had reached compromises with certain clients who initially protested the transaction. Those clients had argued that the Anthropic equity wasn't FTX's property as it was allegedly bought with misapplied client money, a claim reinforced by evidence from co-founder Sam Bankman-Fried's criminal case. However, they consented to the sale on the condition that they could later stake a claim on the proceeds on behalf of FTX users. Andrew Dietderich, FTX's attorney from Sullivan & Cromwell, specified in court that the sale of Anthropic shares is a part of FTX's broader asset liquidation plan to boost bank reserves. Moreover, the proceeds from this sale will be used to reimburse users, supplementing the $6.4 billion FTX already has deposited which can cover refunds for all proven claims.
Earlier this month, FTX had proposed selling its 7.84% investment in Anthropic. It had initially sunk about $530 million into the AI newcomer in April 2022, a few months before its collapse and subsequent Chapter 11 filing in November that year. Post additional funding rounds by Anthropic, FTX's equity was scaled back from over 13.5%. On February 16, The Information mentioned that the latest round of fundraising set Anthropic's value at $15 billion, inflating FTX's interest to a staggering $1.1 billion.
Last month, Dietderich disclosed to the court that FTX envisions fully clearing its debts and abandoning the idea of resurrecting the exchange. Nevertheless, creditor paybacks will be dependent on cryptocurrency rates at the time of FTX's insolvency which was over 15 months ago when Bitcoin was traded at about $16,800. It has since surged by over 200% and now stands at over $51,000. On another note, Bankman-Fried, who was declared guilty of purloining over $8 billion of client funds, is slated for sentencing on March 28. Despite his conviction, FTX's former chief denies any wrongdoing and expressed his intention to contest the judgement.
Published At
2/23/2024 8:47:11 AM
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