FTX Prepares $38M Worldcoin Auction with 75% Discount Potential

OpenAI, the company behind ChatGPT, recently raised $6.6 billion in a funding round that included prominent investors like Microsoft and Nvidia, bringing its valuation to $157 billion. At the same time, the FTX bankruptcy estate is preparing to auction 22 million Worldcoin tokens, valued at $38 million, as part of its ongoing efforts to recover funds. 

FTX Estate Prepares to Auction 22 Million Worldcoin Tokens: A Steep Discount and Lengthy Unlocking Period in Focus

The FTX estate is preparing to auction approximately 22 million Worldcoin (WLD) tokens, valued at an estimated $38 million. The auction, scheduled for Oct. 3, has drawn considerable attention from the cryptocurrency community. According to a source familiar with the matter, bids for the tokens must be submitted by 8 p.m. on the day of the auction, with a minimum bid requirement of $2.5 million.

This development is part of the broader efforts by the FTX bankruptcy estate to liquidate its assets and recover funds following the collapse of the cryptocurrency exchange in 2022. However, the auction’s terms have sparked debate, particularly the possibility that the tokens could be sold at a steep discount of up to 75%, which has raised concerns among some investors.

The Worldcoin tokens being auctioned are subject to a four-year unlocking period, which will extend until 2028. The unlock process will begin on Dec. 1, 2024, with approximately 20,000 WLD tokens unlocking daily. This unlocking schedule will decelerate in July 2026, dropping to roughly 14,000 WLD tokens per day, and continue at that pace until the final release in 2028.

Such long-term unlocking periods can significantly affect the value and liquidity of the tokens. While this may present a discount opportunity for those looking to invest, the steep reduction in price, with tokens potentially selling for as little as $0.40 per WLD (75% below their current market price of $1.63), could also result in heightened market volatility for Worldcoin.

This is not the first time the FTX estate has resorted to auctioning off assets at a discounted rate. In May 2024, the estate concluded the sale of its Solana (SOL) holdings, which was met with widespread criticism from creditors and investors. At the time, FTX sold its remaining Solana tokens at a steep discount of $102 per token, even though the layer-1 cryptocurrency was trading at around $180 on the open market.

The Solana sale, like the current Worldcoin auction, was also subject to a token unlock period, which complicated the valuation of the assets. Sunil Kavuri, one of FTX’s most vocal creditors, harshly criticized the bankruptcy estate for selling Solana tokens at such a deep discount. Kavuri pointed out that some tokens were sold for as little as 11 cents, only to later rise to $2, representing a massive missed opportunity for recovering more value for creditors.

“There’s a token Sullivan & Cromwell sold at 11 cents; it’s now trading at two dollars,” said Kavuri, referencing a previous sale handled by the legal counsel overseeing FTX’s liquidation. He added, “FTX had $10 billion in Solana tokens — they sold at a 70% discount.”

These past sales have led to ongoing tension between the FTX estate and its creditors, who have argued that the estate is short-changing them by offloading assets at prices significantly below market value.

The auction of Worldcoin tokens comes at a time when tensions between FTX creditors and the defunct exchange have reached a boiling point. Kavuri and other creditors have openly criticized the FTX estate’s handling of asset sales and liquidation strategies, arguing that they are being forced to accept substantial losses as a result.

The controversy deepened in September when a revised bankruptcy plan was revealed, which stipulated that creditors could only expect to receive between 10% and 25% of their crypto holdings back. This estimation was based on valuations from when the legal petition was filed — a time when cryptocurrency prices were significantly lower than their current levels. This provision has sparked further outrage among creditors, many of whom believe the estate is not doing enough to maximize the value of their assets.

Rumors and Market Impact

In addition to the ongoing auction preparations, rumors have recently circulated regarding the timing of FTX’s payout to creditors. On Sept. 29, speculation spread that FTX would begin distributing funds to creditors and customers by the end of the month. While these rumors ultimately proved to be unfounded, as the court hearing to confirm the reimbursement is scheduled for Oct. 7, they still had a notable impact on the market.

The mere suggestion of an imminent payout caused a surge in the price of FTX’s native token, FTT. The token saw its value spike by over 70%, reaching a high of around $2.99 on Sept. 30. 

As the auction for Worldcoin tokens approaches, the FTX estate’s strategy of liquidating its assets at a discount has once again sparked debate about the long-term impact on both creditors and the broader cryptocurrency market. While the estate seeks to recover as much value as possible to compensate creditors, the deep discounts on assets like Worldcoin and Solana have raised questions about the overall efficiency and fairness of the process.

OpenAI Raises $6.6 Billion in Capital, Valuing the AI Giant at $157 Billion Amidst Controversy Over Profit Shift

In other news, OpenAI, the creator of the widely-known ChatGPT large language model (LLM), has raised an additional $6.6 billion from institutional investors, pushing its valuation to a staggering $157 billion. The latest funding round saw participation from major venture capital firms Thrive Capital and Khosla Ventures, as well as tech heavyweights Nvidia and Microsoft.

This significant capital infusion comes as OpenAI moves towards a major restructuring, aiming to shift from its current nonprofit status to a fully for-profit model. However, this transition is not without its hurdles, as it involves regulatory challenges and has sparked criticism from both inside and outside the company. Among those critics is Elon Musk, one of OpenAI’s co-founders, who has questioned the legality and ethics of the proposed shift.

The $6.6 billion was raised through convertible debt, a financial instrument that allows investors to convert their investment into equity if OpenAI successfully transitions to a for-profit entity. This shift would mark a significant departure from the company’s original nonprofit framework, which was created to prioritize the safe and ethical development of artificial intelligence.

The current nonprofit structure imposes limits on how much return investors can earn, alongside obligations to maintain nonprofit governance practices. OpenAI’s proposed restructuring would remove these restrictions, opening the door to larger profits and potentially leading to further growth in the AI landscape. However, this path to profitability raises legal questions, particularly concerning the complexity of converting a nonprofit into a for-profit entity, a process that is strictly regulated.

The announcement of OpenAI’s intentions to transition to a profit-driven business model has stirred controversy. Elon Musk, one of OpenAI’s initial co-founders, openly criticized the move, referring to it as “illegal.” Despite Musk’s criticism, legal experts have pointed out that California law, where OpenAI is based, does allow nonprofit corporations to transition into for-profit entities. The process, however, is complex and includes multiple legal steps, such as transforming the nonprofit into a stock corporation before eventually evolving into a limited liability corporation (LLC).

Musk’s criticism stems from his vision for OpenAI as a research-driven nonprofit organization focused on creating AI for the greater good, rather than a profit-driven entity. However, as OpenAI continues to expand its suite of products and explore new revenue streams, the shift to a for-profit model appears to be a strategic move aimed at sustaining long-term growth and innovation.

OpenAI’s massive $157 billion valuation places it among the most highly valued private companies in the world. To justify this valuation, the company is looking for new revenue streams beyond its current offerings, including its popular ChatGPT platform. Reports suggest that OpenAI is exploring high-end subscription models that could command as much as $2,000 per month. These subscription plans would cater to enterprise clients, offering enhanced features and capabilities beyond the free and lower-cost versions of the software.

The company’s growth trajectory has been remarkable, with OpenAI revealing in September 2024 that it had crossed 1 million users across its suite of products. This figure represents a 67% increase since April 2024, a testament to the widespread adoption of OpenAI’s technology by consumers, businesses, and developers alike.

However, to meet the expectations of investors and justify its sky-high valuation, OpenAI will need to scale its revenue streams significantly. Beyond the consumer market, OpenAI is positioning itself as a key player in enterprise AI, offering advanced services that promise to revolutionize industries such as finance, healthcare, and communications.

In a move that further cements its dominance in the AI space, OpenAI recently announced significant updates to its ChatGPT platform, enhancing both its vision and speech capabilities. The latest upgrade, rolled out on Oct. 1, introduces new features that allow the large language model to process voice-to-voice interactions, giving developers the ability to create applications that mimic natural speech patterns.

This enhancement is part of OpenAI’s ongoing effort to improve the versatility and utility of its language model across different industries and use cases. The new features allow for a more streamlined development process for voice-based applications, making it easier for businesses to integrate ChatGPT’s advanced speech recognition capabilities into their platforms.

Additionally, improvements to ChatGPT’s image processing capabilities have been introduced. These updates enable human operators to provide feedback to the language model, which reinforces its learning and helps to train the model over time. By improving its ability to process and interpret images, ChatGPT is becoming a more comprehensive tool that can handle a broader range of tasks beyond text-based conversations.

Security Concerns Continue to Linger

Despite its meteoric rise, OpenAI has faced its share of challenges, particularly in the area of cybersecurity. According to recent reports, OpenAI’s press account hack in 2024 marked the fifth security breach in just 20 months, raising questions about the company’s ability to secure its expansive platform.

As OpenAI continues to expand its offerings and scale its user base, ensuring the security and integrity of its platform will be a critical component of maintaining user trust. The company’s success hinges on its ability to protect sensitive data and maintain compliance with an evolving set of global privacy and security regulations.