May 17, 2024
Altcoins News

Solana Sees 6% Drop Amid Fears of FTX Sell-off

Solana’s price has experienced a decline of over 6% in the last 24 hours, amid concerns that the financially troubled crypto exchange FTX may soon liquidate a significant portion of its holdings in Solana tokens and other Solana-related cryptocurrencies. According to data from Solscan, which has aggregated the value of three publicly accessible FTX cold storage wallets, the FTX estate holds a combined $1.5 billion in crypto assets on the Solana network. Out of this substantial amount, 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 playfully referred to as “Sam coins” about the former FTX CEO Sam Bankman-Fried.

Nonetheless, the prospect of liquidators potentially releasing $128 million worth of SOL and hundreds of millions worth of other SOL-related tokens onto the market has not instilled much confidence in investors. Many users expressed their concerns on X (formerly known as Twitter). For instance, one user wrote, “FTX about to dump $680 million worth of SOL 👀,” while another commented, “SOL is going to experience a significant drop after FTX sells its holdings, likely reaching $14 soon.”

On the other hand, some have called for calm, pointing out that the bankruptcy plan places restrictions on the amount that can be sold at once. According to FTX’s bankruptcy filings, the proposed liquidation plan for FTX’s assets includes several conditions for token sales. FTX proposed appointing Mike Novogratz’s Galaxy Digital Capital Management as the investment manager responsible for overseeing the sale of recovered crypto assets. Under this plan, the FTX estate would be allowed to sell a maximum of $100 million worth of its tokens each week, although this limit could be increased to $200 million on an individual token basis. These restrictions aim to minimize the impact of token sales on the broader market while still ensuring that FTX can satisfy its creditors.

It’s important to note that this plan has not yet received court approval, but it, along with other matters related to FTX’s token sales, is expected to be discussed in the Delaware Bankruptcy Court on September 13. 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 recovered as of November 2022. However, documents from the hearing indicated that FTX held a total of $4.3 billion in crypto assets available for stakeholder recovery at market prices as of April 12.

At the time of this publication, Solana is trading at $18.38 per token, reflecting a nearly 11% decline over the week.

Image by Sergei Tokmakov, Esq. https://Terms.Law from Pixabay

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