FTX wallet activity sparks token dump fears as bankruptcy hearing approaches
Large transfers of funds associated with FTX have been on the move, sparking fears that the tokens, and more from FTX’s holdings, may be about to be sold.
Since August 31, a wallet associated with FTX has sent around $10 million in tokens related to projects on the Solana ecosystem through the Wormhole bridge to another FTX wallet, according to Arkham Intelligence.
The token transfers have sparked fears of incoming token sales leading to price dumps, though it’s unlikely that any large sales are on the immediate horizon. The FTX debtors, in a filing last month, proposed a typical limit of $100 million per week and a maximum limit of $200 million per week for selling digital assets in order to minimize price impact.
The filing also proposes that for sales of bitcoin, ether, and certain other “insider” digital assets, ten days notice be given to the Committee and Ad Hoc Committee of creditors before the sale. While this filing is not yet legally binding, the matter is expected to come before the Delaware Bankruptcy Court on September 13.
In an April filing, the FTX debtors disclosed $3.4 billion in crypto holdings. While the precise breakdown of how much the estate holds in larger, more liquid tokens like bitcoin and ether has not been disclosed, the estate has disclosed its holdings of relatively illiquid tokens.
FTX’s plan for token sales
The FTX debtors have proposed a plan under which the estate’s token sales would be guided by a financial adviser. The estate would only be permitted to sell $100 million per week of most tokens, though that limit could be permanently raised to $200 million on a token-by-token basis.
The debtors also plan to hedge bitcoin and ether in order to minimize the impact of price movement on the proceeds of the sale, though other assets could also be approved as hedges again on a token-by-token basis.
Finally, the estate reserves the right to stake certain tokens provided that the returns from token staking programs would help return more funds to the creditors.
