What information about SUI is revealed in the 123-page court document from MystenLabs and the FTX debtor?

Author: Sui World

Recently, according to relevant court documents, Mysten Labs reached an agreement with FTX debtors on March 22 to repurchase FTX's equity investment in Mysten Labs and SUI token warrants for $96.3 million in cash.

The 123-page document details the situation of FTX's investment in Mysten Labs in August 2022. Combining the court documents and a series of recent actions by Sui, Sui World has made some summaries and analyses:

1. Mysten Labs completes over $300 million Series B financing with a valuation of approximately $2 billion

This financing information was publicly announced last year. FTX and Series B investors obtained Sui Token warrants by investing in the Series B preferred shares of Mysten Labs.

2. FTX invests approximately $102 million to acquire about 890 million Sui Tokens

FTX invested a total of $102 million in Mysten Labs' Series B round, acquiring about 570,000 preferred shares and obtaining warrants for approximately 890 million Sui Tokens. As the lead investor, FTX's average cost for Sui Token was very low, around $0.114.

FTX's acquisition of SUI token warrants is significant in two transactions: Cottonwood Grove Limited (Alameda) and FTX Trading obtained warrants for approximately 517 million Sui Tokens at a price of $500 each, totaling about 173 million and 346 million Sui Tokens, respectively. These 517 million Sui Tokens will be used for market-making trading on the FTX platform after the Sui Network mainnet launch and Sui Token launch, subject to certain conditions. (Sui World Note: Cottonwood Grove Limited is a wholly-owned subsidiary of Alameda Research.)

As a former leading trading platform and market maker, one important condition for FTX to lead the investment of over $100 million in Sui was that its market makers Alameda and FTX Trading almost obtained 517 million Sui Tokens for free to use for market-making on FTX.com. However, with FTX collapsing before the launch of Sui, this warrant agreement no longer exists.

3. The cost basis for some Series B investors' Sui Tokens is approximately $0.28-$0.31

Excluding the market-making portion from FTX, the cost for other Series B investors to obtain Sui Token warrants can still be referenced from FTX Ventures, with an average cost of about $0.28-$0.31.

4. Sui will reclaim a large amount of low-cost institutional chips

In addition to the Sui Token investment chips priced around $0.28-$0.31, FTX, as the lead investor, also acquired an additional 517 million Sui Tokens for market-making.

Now, with Mysten Labs repurchasing FTX's equity investment and SUI token warrants for $96.3 million in cash, it means reclaiming a large amount of FTX's low-cost investment chips and market-making chips. This is a good thing for the future launch of Sui Token.

It is worth mentioning that FTX similarly led another Move chain, Aptos, with a similar valuation and investment amount. FTX's investment plan for Aptos may be very similar to that of Sui, meaning FTX holds a large amount (over one-third of the circulating supply) of low-cost investment chips and market-making chips. This indicates that some low-priced chips have already entered the market for Aptos, which launched before FTX's collapse, and unsold chips will await the disposal plan of FTX creditors.

5. FTX debtors can continue to "seek higher bids from other third parties"

The documents also reveal that FTX debtors can continue to "seek higher bids from other third parties" until the court finally determines the sale date. The equity investment in Mysten Labs and SUI token warrants are still attractive to many institutions.

6. The SUI mainnet launch has removed the biggest external obstacle

By resolving issues with FTX debtors, the biggest external obstacle to the SUI mainnet launch has also been addressed. The launch of the SUI mainnet and the release of Sui Token no longer need to consider the handling of previously invested chips from FTX.

7. The $96.3 million cash repurchase corresponds to a $100 million fund

Once the cash repurchase of $96.3 million is completed, it will have no short-term financial impact on Mysten Labs, which just raised over $300 million last year. The long-term impact may mainly relate to Mysten Labs' layout in Web3, such as investments and acquisitions of Web3 projects.

This aligns with previous news that Mysten Labs CEO Evan Cheng is seeking to raise over $100 million for a Web3 fund that will not be limited to the Sui ecosystem. Hashed co-founder Alex Shin and veteran hedge fund investor Sandeep Ramesh will join the newly established Web3 venture fund as general partners.