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The value of Solana (SOL) has decreased by over 6% in the past 24 hours, amid concerns that the bankrupt cryptocurrency exchange FTX may soon liquidate substantial amounts of the token and other crypto assets linked to Solana.
The price of Solana has dropped to $18.38 in the last 24 hours. Source: CoinGecko
Data compiled from Solscan, which has calculated the total value of three publicly accessible FTX cold storage wallets, indicates that the FTX estate possesses a total of $1.5 billion in crypto assets on the Solana network.
Of this substantial total, Solana tokens represent only $128 million.
The remainder consists of various Solana-based altcoins, including Wrapped Bitcoin (WBTC), Maps token (MAPS), Serum (SRM), and several other tokens informally known as “Sam coins,” a reference to former FTX CEO Sam Bankman-Fried.
The total value of Solana-based tokens in FTX Cold Storage #1 wallet. Source: Solscan
Nonetheless, the prospect of liquidators potentially releasing $128 million worth of SOL and hundreds of millions in other SOL-related tokens into the market has not fostered much confidence among investors.
Several users expressed their worries on X (formerly Twitter) regarding the anticipated sell-off. “FTX about to dump $680 mil worth of SOL 👀” commented one user. “SOL is going to drop significantly after FTX sells its holdings, likely reaching $14 soon,” stated another.
Conversely, some have called for patience, noting that the bankruptcy plan actually limits the amount that can be sold at one time.
As per FTX bankruptcy documents, the proposed liquidation plan for FTX’s assets includes several stipulations regarding the sale of tokens.
On August 24, FTX suggested appointing Mike Novogratz’s Galaxy Digital Capital Management as the investment manager responsible for overseeing the sales of its recovered crypto assets.
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Under this plan, the FTX estate would be allowed to sell a maximum of $100 million worth of its tokens weekly, although this cap could be increased to $200 million for individual tokens.
These restrictions have been implemented to reduce the effect of token sales on the wider market while still enabling FTX to satisfy its creditors.
The FTX collapse and the resulting largest black swan event Solana has faced brought SOL down to $8.
And we’re concerned about ~$600M that will be sold over the next 5 years?
Some major Layer 1s have higher inflation than this and no one seems to mind.— Gumshoe (@0xGumshoe) September 10, 2023
It is important to note that the plan has not yet received court approval; however, the proposal and various other issues related to the FTX token sales are anticipated to be presented to the Delaware Bankruptcy Court on September 13.
Related: FTX wallet transfers $10M in crypto, raising concerns about potential token dumps
During an April 12 hearing, FTX revealed that it had recovered approximately $7.3 billion in liquid assets, with $4.8 billion of that amount being assets retrieved as of November 2022.
Overall, according to documents presented during the hearing, FTX held a total of $4.3 billion in crypto assets available for stakeholder recovery at market prices as of April 12.
FTX assets available for stakeholder recovery as of April 12. Source: Sullivan and Cromwell
At the time of this report, Solana is trading at $18.38 each, reflecting a nearly 11% decline for the week.
Collect this article as an NFT to commemorate this moment in history and support independent journalism in the crypto sector.
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