Key Takeaways:
Bankrupt cryptocurrency exchange FTX is selling most of its stake in artificial intelligence startup Anthropic for $884 million, according to a Bloomberg report that refers to a filing submitted to the US Bankruptcy Court in Deleware on March 22nd.
The move comes after the former crypto exchange struck a deal with a consortium of buyers to repay its creditors and bolster its cash reserves.
FTX is Selling Two-Thirds of its 8% Stake in Anthropic to Repay Customers and Creditors
The report mentioned a list of two dozen buyers, including ATIC Third International Investment Company – an enterprise associated with the United Arab Emirates’ sovereign wealth fund Mubadala, quantitative trading firm Jane Street, venture capital firm HOF Capital, the Ford Foundation, and funds managed by Fidelity Asset Management.
ATIC Third Capital is purchasing nearly $500 million worth of Anthropic shares from FTX, making it the largest buyer of the lot. Jane Street, a company where FTX co-founder Sam Bankman-Fried and the ex-CEO of sister firm Alameda Research, Caroline Ellison, had previously worked, has agreed to purchase almost $100 million worth of shares.
The trading firm’s head of quantitative research, Craig Falls, has proposed to buy $20 million Anthropic shares personally.
FTX invested $500 million in Anthropic back in 2021, a year before the crypto exchange declared bankruptcy and the boom in generative AI. Over the last couple of years, the startup founded by ex-OpenAI employees raised $7 billion in investments from Big Tech giants such as Amazon and Google.
In December 2023, the AI company’s valuation hit $18 billion, putting FTX’s roughly 8% stake at about $1.4 billion.
Bankruptcy Estate Collects $7 Billion in Cash and Assets Belonging to FTX
FTX’s bankruptcy estate, led by new CEO John Ray III, has been tracking down cash, luxury properties, crypto, and missing assets linked to the collapsed crypto exchange. To date, the estate has collected more than $7 billion.
Last month, a lawyer representing the bankruptcy estate told a Delaware judge that they expect to use the funds raised from the sale of Anthropic shares to fully repay FTX customers and creditors with legitimate claims.
US bankruptcy judge John Dorsey then approved the decision to sell the shares, but FTX’s creditors still had reservations about the sale, asserting that the company had acquired the shares using customer funds. However, what convinced creditors was FTX’s promise to use the sales proceeds to repay them.
The sale of Anthropic shares will allow FTX to generate substantial funds that will be crucial in addressing its financial obligations.
The sale of FTX’s shares in Anthropic has not yet been cleared by Judge Dorsey. Should it be approved, it would collectively account for nearly two-thirds of the former crypto exchange’s stake in the AI startup.
Bankman-Fried Faces 110 Years Behind Bars
FTX’s demise began in November 2022, when a CoinDesk article leaked the company’s balance sheet showing a $8 billion gap as a result of mass mismanagement of customer funds. It was later revealed that Bankman-Fried and his business partners were using customer and investor funds to buy luxury items, fund celebrity-led endorsement campaigns, and make donations to US politicians to buy influence.
In November, Sam Bankman-Fried was convicted of seven counts of wire fraud, securities fraud, and money laundering concerning the collapse of FTX and hedge fund Alameda Research. He faces up to 110 years behind bars.
Prosecutors are asking the court for a reduced sentence between 40 to 50 years. The disgraced former billionaire’s sentencing is scheduled for Thursday, March 28th, 2024.
