Compilation: Felix, LianGuaiNews
A significant amount of funds related to FTX have been transferred, and the market is starting to worry that these tokens, as well as more tokens held by FTX, may soon be sold off.
According to data from blockchain analysis platform Arkham Intelligence, since August 31, a wallet related to FTX has sent approximately $10 million worth of tokens to another FTX wallet through the Wormhole bridge, including $6.23 million worth of ETH and over $4 million worth of altcoins ($1.2 million of FTT, $1.8 million of UNI, $1.3 million of HXRO, $550,000 of SUSHI, and $260,000 of FRONT). It is currently unclear whether these transfers are related to the exchange’s bankruptcy proceedings or its recent request to hire Galaxy Digital to sell its held cryptocurrencies for fiat currency.
In addition, on-chain data shows that on September 1, several FTX cold wallets started transferring their holdings of SOL. These wallets hold nearly 7 million SOL, equivalent to approximately $134 million.
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FTX Seeks Asset Sale
According to court documents submitted by FTX on August 23, FTX intends to begin selling, pledging, and hedging its large amount of cryptocurrency assets. FTX wishes to return funds to creditors in fiat currency instead of Bitcoin or Ether, and is concerned that a one-time sale would cause a price crash, resulting in a depreciation of its over $3 billion cryptocurrency holdings. Therefore, FTX proposed a sales limit of $100 million in tokens per week, with a maximum limit of $200 million per week.
In addition, FTX also requested to hire Mike Novogratz, CEO of Galaxy Digital, as an investment manager to oversee the management and sale of its recovered cryptocurrency assets. Under the proposed agreement, Galaxy would manage and trade FTX’s assets, converting them into fiat currency or stablecoins, and hedge the defunct exchange’s risk exposure to volatile cryptocurrencies in exchange for monthly custody fees.
FTX believes that Galaxy has the ability to sell a large amount of cryptocurrency without affecting the market. Additionally, the exchange proposed a separate motion to develop guidelines for managing and selling its digital assets, and to hedge eligible cryptocurrencies (primarily Bitcoin and Ethereum).
The exchange also requested permission to collateralize some idle cryptocurrency assets to generate passive income, in order to increase the funds distributed to customers still awaiting refunds.
Although the claims presented in the documents are not legally binding, the FTX token sale case is expected to be submitted for hearing at the Delaware Bankruptcy Court on September 13.
Relaunching FTX Exchange
FTX has now submitted a restructuring plan, with key information including: all non-customer claims (such as the US Internal Revenue Service) will be treated as subordinate; FTT claims will have a zero amount; offshore exchanges will relaunch to compensate for customer shortfalls, and more.
Previously, the current CEO of FTX has “started soliciting interested parties to relaunch FTX.com exchange.” According to court documents filed on June 22 at the Delaware Bankruptcy Court, Nasdaq, Ripple Labs, Galaxy Digital, BlackRock, Tribe Capital, Robinhood, NYDIG, and OKCoin have shown interest in the relaunch of FTX 2.0.
FTX lawyers said that the launch of the new exchange is expected to be completed at some time in the second quarter of 2024.
Slow progress and accusations from creditors
FTX faces accusations from creditors due to slow progress in its bankruptcy plan negotiations.
Brian Glueckstein, the lawyer for the exchange, rejected the request to expedite mediation at the latest bankruptcy hearing held on August 23, stating that the bankruptcy process is expected to be completed in the second quarter of 2024.
Previously, a plan outline submitted by FTX on July 31 outlined the intention to repay customers through asset liquidation and lawsuits against internal personnel. However, FTX is committed to finding a buyer for the FTX.com exchange and there is no news of offers from relevant institutions. This “delay” undoubtedly exacerbates the tension between FTX and its creditors.
In addition, the monthly cost of $50 million for legal fees and other expenses reduces the amount available to repay creditors for every dollar used to pay legal fees.
Related reading: FTX latest progress: about to launch a creditor claim website, rumors of a restart bring hope?
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