In a significant move, the bankruptcy estate of FTX, the now-defunct cryptocurrency exchange, has reportedly liquidated approximately $1 billion worth of shares from Grayscale’s GBTC fund since the fund’s transformation into a spot bitcoin ETF. The sale, encompassing around 22 million shares, aimed at capitalizing on price disparities between Grayscale trust shares and the net asset value of underlying bitcoin.
Spot bitcoin ETFs officially commenced trading on January 11, marking the end of a prolonged wait after receiving approval from the U.S. Securities and Exchange Commission (SEC). While Grayscale’s fund had existed for a decade, initially structured as a less-attractive closed-end fund, its conversion into an ETF, following SEC approval, saw the launch of ten newly created bitcoin ETFs.
The bankruptcy estate of FTX, approved in November, had a recovery goal of approximately $873 million by selling over 22 million GBTC units. This included FTX’s stakes in Grayscale Investments and Bitwise, valued at $807 million and $66 million, respectively. FTX’s initial holding comprised 22.3 million GBTC shares, valued at $597 million, which surged to around $900 million with the initiation of Grayscale’s bitcoin ETF.
CoinDesk, citing private data and anonymous sources, reported that FTX played a significant role in the sale, accounting for a substantial portion of the nearly $1 billion worth of shares liquidated. The data suggests strategic exploitation of price differences by FTX between Grayscale trust shares and the underlying bitcoin net asset value.
Contrary to optimistic forecasts, Bitcoin’s price experienced a decline following the approval of ETFs, highlighting the intricate dynamics in the evolving landscape of cryptocurrency investments. The introduction of bitcoin ETFs was expected to offer the general public a more accessible way to invest in bitcoin.
As part of its approved bankruptcy estate in late November, FTX plans to continue the liquidation of over 22 million GBTC units to recover around $873 million in assets. This includes FTX’s stakes in Grayscale Investments and Bitwise, emphasizing the ongoing efforts to maximize asset recovery in the ever-changing crypto investment landscape.
