This ruling gives FTX permission to trade, stake and hedge its digital assets.
It is no secret that the cryptocurrency market is particularly volatile. The announcement of a major liquidation plan could trigger a panic sell-off that would cause prices to drop sharply. By avoiding prior public notification, FTX may attempt to minimize this risk.
Collapsed cryptocurrency exchange FTX received approval from the US Bankruptcy Court this week for the District of Delaware to sell and invest its cryptocurrency holdings, valued at more than $3 billion, to settle its debt to the creditors, leading some analysts to believe the funds will be dumped into the market. Judge John Dorsey gave the green light, side-stepping two previous major concerns against the plan.
FTX’s cryptocurrency assets are believed to exceed $3.4 billion. An attorney, on behalf of FTX’s ad hoc client committee, seconded the motion. Meanwhile, a representative of the unsecured creditors stated that all parties were interested in speeding up the procedure.
As previously reported, a recent court filing revealed that the estate of the once-giant cryptocurrency exchange, which filed for bankruptcy in November after collapsing due to a bank run, has revealed assets totaling approximately $7 billion.
Of these assets, the exchange’s holdings include $1.16 billion in Solana tokens ($SOL) and $560 million in Bitcoin ($BTC). The documents also detail billions in payments the company made to top executives, including founder Sam Bankman-Fried.
More Insights
On September 11, user @StackerSatoshi posted on X the following:
“A new filing by FTX provides an updated look into what coins they hold. These are their 10 largest holdings which make up ~72% of their crypto. The additional ~28% are made up of 400+ other tokens.”
Filings reveal that the company has secured $1.5 billion in cash, on top of the $1.1 billion it had as of Nov. 11. It has $3.4 billion in cryptocurrencies, valued at the end of August, without taking into account its collection of over 1,300 lesser-known tokens, including MAPS and serum (SRM).
FTX’s liquidation of its digital assets could significantly impact the cryptocurrency market. However, popular cryptocurrency analyst Lark Davis noted that up to $50 million in digital assets can be sold per week and that FTX must notify its activities in writing. On September 13, Davies posted the following on X:
“FTX has received court approval to sell off its crypto assets. This includes
A fat billy of SOL (about 85% vesting, 15% liquid)
Half billy of BTC all liquid
200 milly ETH all liquid.
Some other stuff
– Can sell is 50 million per week.
– Must give written notice
= Nothing Burger.”
The cryptocurrency market, the analyst added, is capable of absorbing $50 million of additional selling pressure per week, which could significantly reduce or even nullify the impact of FTX sales on the market.
Another Expert’s Opinion
The sales come at a time of economic uncertainty, with well-known economist Peter Schiff recently revealing growing concerns regarding the stability of the US dollar. He pointed out that “there is going to be a massive crisis” that will cause “the economy to plummet.”
Schiff suggested that investors should escape from the US dollar as “there will soon be an avalanche with a rush to get out of the dollar.” The US national debt has ballooned to more than $33 trillion, and for Schiff the repercussions of this will soon become apparent when interest on it becomes the largest government expense.
By Leonardo Pérez
