FTX’s Alleged $5.5 Billion ‘Liquid Assets’ Include Locked SOL Cache and Illiquid FTT Holdings

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Two days ago, FTX bankruptcy administrators and debtors issued an update to unsecured creditors claiming the discovery of $5.5 billion in liquid assets. About $3.5 billion of these funds are cryptocurrency assets, with 11 different digital currencies classified as “liquid assets.” However, two of the company’s major cryptocurrency caches are illiquid as the company’s 47.51 million SOL tokens are locked and the company’s FTT balance skews the realization of actual liquidity due to control by FTX of more than 80% of the supply.

Locking up Solana and illiquid FTT assets to complicate FTX bankruptcy process

On January 17, 2023, FTX Debtors issued a press release and visual presentation of assets discovered since the company filed for Chapter 11 bankruptcy on November 11, 2022. FTX Debtors claim to have found $5.5 billion via a “Herculean investigative effort”. ”, with 3.5 billion dollars which would be crypto assets. The visual presentation explains that FTX controls approximately $685 million in solana (SOL) tokens, or approximately 47,511,173 SOL, and using the current SOL exchange rate, this cache is worth well over $685 million.

Screenshot of FTX debtors’ presentation to the committee of unsecured creditors.

However, the SOL held by FTX debtors is locked and this aspect is not mentioned in the visual presentation shown to unsecured creditors. It has been reported that FTX/Alameda has successfully purchased 16% of the Solana Foundation’s SOL supply, but there is a blocking schedule. The current reserve of 47.51 million SOL is equivalent to 8.82% of the total supply that the Solana network will eventually issue over time. Currently, there are only 370,992,365 SOL in circulation and this does not take into account the 47.51 million locked SOL held by the liquidators.

The number of solana (SOL) lock-in participations from Alameda Research, according to statistics from solanacompass.com.

The problem with calling this liquid cache SOL is that it is locked and subject to linear acquisition until 2025-2027, and it could be years before the funds are accessible. Additionally, the debtor cache of the ftx token (FTT), a coin originally created by FTX core team, is also not liquid as FTX controls over 80% of the entire offer. For example, the Ethereum (ETH) address “0x97f” controls 45,850,883 FTT, worth over $1.8 billion using current exchange rates. The FTX debtors presentation shows that FTT is worth $529 million worth of FTT tokens.

Solana’s locked issue and the fact that FTX owns most of the FTT in circulation puts these tokens more on the side of illiquidity. This could complicate the bankruptcy process and payments to creditors as it would be difficult to convert these assets into cash or other crypto assets without a significant impact on the market price.

The liquidators wallet which contains 45.85 million ftx tokens (FTT).

Even if SOL were unlocked, dumping 47.51 million SOL in the market would cause disruption. Additionally, FTT suffers from low trading volume, limited exchange listings, few use cases, and the company controls most of the FTT offering. Because FTX holds a significant amount of FTT’s total supply, this can easily affect the ability to trade it. Calling these SOL and FTT token caches “liquid” is questionable because the data does not support this definition.

Tags in this story Assets, Bankruptcy, bankruptcy administrators, Cash, Chapter 11, conversion, Court filing, creditors, creditors meeting, crypto assets, Crypto funds, crypto holders, crypto market, crypto trading, crypto transactions, Crypto -currency, cryptocurrency market, debt, digital assets, digital currencies, discharge, exchange listings, financial assets, TTF, FTX debtors, large holders, linear acquisition, liquid assets, liquidation, liquidity, market price, property, payments to creditors, petitions, plan, protection, reorganization, plan of reorganization, SOL, Solana, Trading Volume, Trustee, use cases

What do you think of FTX finding $5.5 billion in liquid assets, despite the presence of blocked SOLs and illiquid FTT holdings? How do you think this will affect the bankruptcy process and payments to creditors? Share your thoughts in the comments section below.

Jamie Redman

Jamie Redman is the news manager for Bitcoin.com News and a fintech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He is passionate about Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written over 6,000 articles for Bitcoin.com News about disruptive protocols emerging today.

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