Dave Acquires $100M Stake from FTX in Strategic Move

In a significant financial move, fintech firm Dave is set to repurchase a $100 million convertible promissory note from FTX Ventures, the venture capital arm of the bankrupt crypto exchange FTX. The deal, currently awaiting bankruptcy court approval, involves a discounted purchase price of $71 million.

Strategic Financial Transaction

Dave, known for its mobile app providing various financial services, including savings accounts and cash advances, will acquire the note at a discounted rate. Pending approval from the bankruptcy court, a hearing for the transaction is scheduled for Jan. 25. This financial instrument, a convertible promissory note, is commonly utilized by startups, essentially representing a loan convertible into company shares.

Dave's Financial Landscape

The fintech company, which entered into a partnership with FTX in March 2022 to facilitate cryptocurrency payments, has raised a total of $536.3 million in funding over nine rounds. Dave's latest funding, secured through a $50 million debit emission in September 2023, showcases its continuous financial growth.

FTX's Complex Bankruptcy Proceedings

FTX and its subsidiaries faced multiple challenges, with investments, payments, and donations reclaimed by the bankruptcy court in the months leading up to the November 2022 bankruptcy. The recent global settlement between FTX debtors and the Joint Official Liquidators for the Bahamian arm is described as a "novel and mutually-beneficial solution" addressing cross-border legal issues.

Asset Liquidation and Legal Proceedings

FTX debtors have been seeking court approval for various asset sales to repay creditors, including the divestment of LedgerX, the sale of trust assets valued at $873 million, and the liquidation of digital assets worth $3.4 billion. Legal proceedings have also resolved issues between FTX and Genesis.

Financial Recovery Amidst Legal Challenges

Out of approximately $8.7 billion in misappropriated customer funds, at least $7 billion in assets have been recovered. FTX founder Sam Bankman-Fried faces multiple charges and was found guilty on Nov. 2. His sentencing is scheduled for March 28, 2024.

While Dave's move to repurchase the FTX stake indicates strategic financial maneuvering, the broader context reveals the intricacies of FTX's bankruptcy proceedings. Despite legal challenges, both companies navigate a complex financial landscape, emphasizing the resilience required in the fintech industry.