- The FTX estate has recently liquidated its last 15 million shares in the AI startup Anthropic for $450 million.
- This sale is part of FTX’s bankruptcy proceedings, which have so far accumulated extensive legal and administrative costs.
- An $800 million profit has been realized on the initial $500 million investment, with the total earnings hitting $1.3 billion.
FTX’s final liquidation boosts its treasury amid bankruptcy but raises questions over mounting legal expenses.
Major Liquidation: FTX’s Final Sale of Anthropic Shares
The FTX bankruptcy estate, managed by CEO John Ray III, has completed the divestiture of its remaining shares in the AI developer Anthropic, known for its chatbot Claude. According to the latest bankruptcy filings, FTX sold its last 15 million shares at $30 each, accumulating more than $450 million from this final sale.
Significant Financial Outcomes
The liquidation marks a remarkable return on FTX’s initial investment of $500 million in Anthropic shares, generating total earnings of approximately $1.3 billion and a profit of $800 million. The share price stayed consistent with previous sales conducted earlier in the year, highlighting stable investor confidence in the AI startup.
Buyers and Market Reaction
G Squared, a global venture capital fund, emerged as a principal purchaser, obtaining nearly one-third of the shares, which equated to 4.5 million shares worth $135 million. Other investment funds constituted the majority of the 20 additional buyers of Anthropic shares.
Bankruptcy Costs on the Rise
While FTX has successfully liquidated its Anthropic assets, the bankruptcy process itself has proven costly. Legal and administrative expenses have surpassed $700 million, as reported by insolvency expert Mr. Purple. These escalating costs have been a point of contention among creditors and stakeholders.
Alarming Legal Complexities
Concerns have been raised about potential conflicts of interest at Sullivan and Cromwell, the principal law firm handling FTX’s bankruptcy, due to their previous representation of the company. These issues have necessitated the appointment of an independent examiner, compounded by an emerging class-action lawsuit against the law firm.
Prior Investigations and Broader Implications
An investigation by the New York Times uncovered that law firms have charged hundreds of millions in fees from crypto companies in similar circumstances. In FTX’s case, CEO John Ray III has billed the estate $5.6 million, based on his hourly rate of $1,300 since taking over the bankruptcy proceedings. Such revelations underscore the financial burden on already strained bankruptcy estates.
Looking Ahead: Repayment Plans
Despite the overwhelming legal fees, the FTX estate remains hopeful about compensating its creditors. Current strategies aim to repay 98% of creditors at least 118% of their allowed claims, evaluated based on the dollar amount at the time of FTX’s bankruptcy filing. This optimistic outlook seeks to alleviate some financial distress among creditors.
Conclusion
The final sale of Anthropic shares further strengthens FTX’s financial position during its bankruptcy proceedings, albeit the rising costs associated with legal and administrative fees pose significant challenges. The unfolding legal complexities and potential conflicts of interest necessitate careful scrutiny to ensure transparent and fair handling of FTX’s obligations to its creditors. As the company navigates these tumultuous waters, its ability to fulfill its repayment objectives will be pivotal in restoring confidence among its investors and stakeholders.
