Over the last 24 hours, the price of Solana (SOL) has experienced a significant drop of more than 6%.
This decline has sparked concerns within the cryptocurrency community, as fears circulate that the troubled crypto exchange FTX may be preparing to liquidate a substantial portion of its holdings, including various Solana-affiliated crypto assets.
Data from Solscan reveals that FTX’s estate holds an impressive $1.5 billion in crypto assets on the Solana network. Within this substantial figure, Solana tokens themselves account for only $128 million.
The remainder is comprised of a variety of Solana-based altcoins, often referred to humorously as “Sam coins” in reference to the former FTX CEO Sam Bankman-Fried.
The prospect of liquidators potentially releasing $128 million worth of SOL tokens and hundreds of millions of other SOL-affiliated tokens into the market has understandably raised concerns among investors.
In response to these fears, some cryptocurrency enthusiasts have taken to social media, such as X (formerly Twitter), to voice their concerns.
One user expressed, “FTX about to dump $680 mil worth of SOL,” while another predicted, “SOL is going to dump hard after FTX sells its bag, going to reach $14 soon.”
Despite these concerns, others have urged caution, highlighting that the bankruptcy plan associated with FTX’s liquidation imposes restrictions on the sale of tokens.
FTX’s proposed bankruptcy plan outlines several conditions for the sale of tokens. As of August 24th, the plan proposed Galaxy Digital Capital Management, led by Mike Novogratz, as the investment manager responsible for overseeing the sale of recovered crypto assets.
Under this plan, the FTX estate would be limited to selling a maximum of $100 million worth of its tokens each week. However, this limit could potentially be raised to $200 million on an individual token basis.
These limitations have been introduced to mitigate the potential impact of token sales on the broader cryptocurrency market while still ensuring that FTX can meet its obligations to creditors.
It’s important to note that the proposed plan has not yet received court approval. Matters related to the FTX token sales and the bankruptcy plan are expected to be reviewed by the Delaware Bankruptcy Court on September 13.
During a hearing on April 12th, FTX disclosed that it had recovered approximately $7.3 billion in liquid assets, with $4.8 billion of that sum 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 12th.
