Debtors of collapsed cryptocurrency exchange FTX filed a motion in bankruptcy court on Thursday seeking to sell a multimillion-dollar stake in Web3 company Mysten Labs back to the Delaware startup.
Mysten Labs’ offer includes $95 million in preferred stock and $1 million worth of SUI token warrants, a financial derivative that grants its holders the right to buy tokens at a given price under certain conditions. Mysten Labs is building a proof-of-stake blockchain called Sui and an open-source programming language called Move. Mysten Labs’ Sui developer network is live, with a full rollout planned for Q2 of this year.
FTX began increasing its stake in Mysten Labs last August, months after the swift collapse of Sam Bankman-Fried’s cryptocurrency empire. The sale of its Mysten Labs-related assets represents an effort to minimize debtor relief by current CEO John Jay Ray III, who took over FTX when it filed for Chapter 11 bankruptcy last November.
FTX’s venture arm led Mysten Labs’ Series B funding round. Mysten Labs announced it raised $300 million at a $2 billion valuation, with backing from Andreessen Horowitz, Binance Labs, Coinbase Ventures, Circle, Franklin Templeton and Samsung Next, among others.
According to Pitchbook, Mysten Labs’ funding round helped the digital asset industry maintain its position as the industry leader in venture capital emerging technologies through the third quarter of 2022. It was the largest deal of the quarter, second only to the $350 million early-stage funding round for Flow, a startup founded by Adam Neumann. Pursuant to the motion, Mysten Labs issued a proposal to recover shares in FTX on March 16, which was deemed an "attractive proposal that would enable the debtor to recover substantial value of the debtor's investment through FTX."
The offer set an expiration date in late April. In a separate letter, Mysten Labs communicated to FTX its "desire to complete the transaction expeditiously."
Mysten Labs declined Decrypt's request for further comment. The $96 million sale of the Mysten Labs stake represents a slight loss compared to the amount FTX invested. Between stock and token warrants, FTX spent $102 million, according to the motion. While FTX said it does not plan to auction off its stake in Mysten Labs and associated token warrants, the company noted that it “may seek higher or better offers from any third party” pending the court order.
