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Cryptocurrency News Articles
FTX Estate to Auction $37.7M Worth of Locked WLD Tokens at a Significant Discount
Oct 03, 2024 at 01:04 am
Bids are due for the FTX locked WLD tokens by 8 pm ET on Wednesday, sources said, adding that notifications for accepted bids were expected by Thursday.
FTX estate to auction 22.3 million locked Worldcoin tokens
The FTX estate is preparing to auction off 22.3 million locked Worldcoin tokens (WLD) in a fire-sale bid, according to sources familiar with the matter.
The tokens, which are currently valued at about $37.7 million, will be sold in a single lot, and bids are due by 8 pm ET on Wednesday, the sources said. Notifications for accepted bids are expected to be sent out on Thursday, they added.
The starting bid for the tokens will be 40% below the current market price, and the final auction price could be anywhere from 40% to 75% off, the sources said. The tokens are currently trading at about $1.69 each.
The FTX estate has been trying to recover funds for creditors since the cryptocurrency exchange collapsed in November 2022. As part of that effort, the estate has already sold its last remaining Solana (SOL) tokens to Pantera Capital and Figure Markets at a discount.
The Worldcoin tokens were acquired by FTX in 2022 as part of a deal to integrate Worldcoin's technology into the exchange's platform. However, the tokens became locked following FTX's bankruptcy filing, and they are scheduled to progressively unlock through 2028.
Specifically, the tokens provide access to 20,539 WLD per day commencing on December 1, 2024 and ending on July 24, 2026, and to 13,689 WLD per day from July 25, 2026 through July 24, 2028.
One source and a separate industry participant expressed concern over the long lockup periods for the FTX locked WLD tokens.
The warning echoes comments made by Figure Markets co-founder and CEO Mike Cagney earlier this week on social media platform X, regarding the large discount possible and the slowly-unlocking timing for the tokens.
Cagney noted that Figure Markets could set up a fund for participation in the auction, similar to how they did it in participating in the Solana auction of FTX.
The move comes after the FTX Estate sold its last remaining SOL tokens to Pantera Capital and Figure Markets at a discount in May, in an attempt to make amends for claims by creditors. The company had jettisoned SOL tokens valued at $2.6 billion for the paltry sum of $102 per token.
The estate has been criticized by some creditors for selling the tokens at a deep discount, but the estate has said that it is trying to maximize the recovery for creditors while also considering the liquidity of the tokens.
The Worldcoin tokens are relatively illiquid, and they are not currently listed on any major cryptocurrency exchanges. As a result, the estate may have had difficulty in selling the tokens on its own.
The auction will be handled by FTX’s bankruptcy lawyers at Sullivan & Cromwell, with the law firm’s special counsel Daniel Friedmann overseeing the process, according to the sources. Friedmann declined to comment on the matter when contacted by Blockworks.
The estate has also engaged Cowen Inc. to assist in marketing and soliciting bids for the tokens, the sources added, with a Cowen spokesperson confirming their involvement in the sale.
The bankruptcy estate of FTX has recovered about $460 million in cash and digital assets so far, according to a recent court filing. The total includes about $360 million in cash and about $100 million in cryptocurrencies, as of 24 March.
The estate has also identified about $4.3 billion in assets that could potentially be recovered, but those assets are still subject to legal claims and disputes.
The FTX bankruptcy is one of the largest and most complex in history, and it has attracted a lot of attention from creditors, lawyers, and regulators. The estate is still trying to recover funds for creditors, and it is expected to continue to sell assets in the coming months.
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