Earlier this week, crypto exchange FTX revealed that it holds more than 16% or $1.16 billion of the token’s outstanding supply in Solana.
In a major development on Wednesday, September 13, the Delaware Bankruptcy Court gave a nod to bankrupt crypto exchange FTX to proceed with the sale of its $3.4 billion worth of crypto holdings, and further repay its creditors.
During a court hearing, Judge John Dorsey granted approval for the motion and dismissed two objections that had been raised in opposition to the plan. “The sooner we can get this process rolling, the better,” he said.
Last month in August, crypto exchange FTX submitted a filing requesting permission while stating that hedging its crypto assets would “allow the Debtors [FTX] to limit potential downside risk prior to the sale of such bitcoin or ether”. FTX’s lawyers stated that “staking certain digital assets … will inure to the benefit of the estates – and, ultimately, creditors – by generating low-risk returns on their otherwise idle digital assets”.
FTX has received approval to sell digital assets, with the exception of Bitcoin (BTC), Ether (ETH), and specific insider-affiliated tokens, in weekly batches through an investment adviser following established guidelines. The initial weekly limit for sales will be $50 million, which can be increased to $100 million in subsequent weeks with approval from the creditors’ committee, ad hoc committee, or court.
For Bitcoin, Ether, and insider-affiliated tokens, FTX may sell them separately after providing a 10-day notice to the committees and the US trustee, appointed by the United States Department of Justice. These sales will also be conducted through an investment adviser. Information related to these sales will be treated with strict confidentiality, with a redacted version available to the public. If the committees and the US trustee raise objections, the sales will be postponed until the objections are resolved or the court orders the sale.
Will FTX Sell Solana Massively Again?
Earlier this week, crypto exchange FTX revealed that it holds more than 16% or $1.16 billion of the token’s outstanding supply in Solana. Additionally, the exchange holds $560 million worth of Bitcoins and $270 million worth of Ether.
Amid news of the creditor liquidation, the crypto market was under selling pressure earlier this week. Ethereum-competitor Solana suffered the most brutal correction with its price tanking to $17.50 levels earlier this week.
However, Solana has recovered well and is currently trading 5% up at a price of $18.77 with a market cap of $7.715 billion. Market analysts believe that the worst for Solana could be behind! Popular crypto analyst Michael van de Poppe explained that FTX has the capability to liquidate assets worth up to $200 million weekly, which could help clear their liabilities.
While this may exert additional selling pressure on the markets, it’s likely that this scenario has already been factored into current market conditions.
The noteworthy aspect here is that there could have been a significant sell-off of Solana assets. However, it’s worth noting that Solana has already experienced substantial selling activity in the past week. This could lead to a situation where the adage “sell the rumor, buy the news” comes into play.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.