MLB held its Rule V draft this morning. The Yankees lost three players: catcher Luis Torrens and relief pitchers Caleb Smith and Tyler Webb.
Torrens is the big loss here. He was considered a top-10 Yankee prospect, and one of the better Yankee IFA signings in recent memory, before missing the entire 2015 season with an arm injury. He returned in 2016, but wasn't very good (.250/.350/.336, most at Low-A). Torrens has elite defensive tools and is supposed to have hitting potential, but he has less than a full season of experience above short-season ball. That said, I could see him sticking as a backup catcher for a full season with the Reds. He can play defense, and they have nothing to lose. Good gamble by the Reds.
Smith and Webb are more typical Rule V selections. Both are bullpen arms who had okay, but not great, seasons in the high minors. The Yankees won't miss them.