According to reports, defunct cryptocurrency exchange FTX liquidated $240 million worth of crypto assets yesterday. According to the exchange’s Bankruptcy Crypto Asset Liquidation Data, the total amount sold in December 2023 is around $500 million. The liquidations could be behind the recent crypto market slump.
Also Read: FTX: SBF Earns Dubious Title of “Worst Witness” Amid High-Stakes Trial
FTX’s liquidation steps are a part of its plan to reimburse billions to its customers and creditors. However, the plans have left several questions unanswered, such as methods for valuing crypto tokens and the expected recovery rate for creditors. The submitted proposal will enter the creditor vote next year and seek approval from US Bankruptcy Judge John Dorsey.
As per the proposal, there will be cash distributions after selling a significant portion of the exchange’s holdings. According to a ChatGPT estimate shared by X user “Mr. Huber,” a total of around 8,000-12,000 lawyers may have worked on the FTX process.
Will Solana (SOL) plummet after FTX’s liquidations?
A majority of the exchange’s holdings constitute Solana (SOL). The firm’s founder, Sam Bankman-Fried, was very bullish on the token and purchased large quantities at low prices. According to reports, the exchange has more than $1 billion worth of SOL tokens.
FTX’s liquidation drive is likely to continue. Moreover, the massive sale of assets will likely shape market movements over the next few weeks. The development could hamper the anticipated crypto market bull run in 2024. However, a spot Bitcoin (BTC) ETF (Exchange Traded Fund) and BTC’s halving in April could cushion any massive liquidations from the now-defunct exchange.
Also Read: FTX Founder Sam Bankman-Fried Is Now Trading Fish Instead of Crypto
The firm’s native token, FTT, has also faced a massive correction. FTT has fallen 9.2% in the last 24 hours and over 28% in the weekly charts. The token is also down by 32% in the 14-day charts. However, FTT is still up by over 16% over the previous month and over 224% since December 2022.
