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- The new management of FTX had listed some tokens to repay the debtors.
- Nearly $5.5 billion of assets could be dumped.
- Dumping could create bad situations in the market.
Billions of dollars of customers’ and creditors’ funds are stuck in FTX, post its collapse and chapter 11 bankruptcy filing on November 11, 2022. The new management of the once third largest crypto exchange had pinpointed assets worth $5.5 billion, which can be used to repay creditors. This may be good news, but it would imply that a huge chunk of crypto assets would be dumped in the market.
What do they have- “liquid”?
FTX debtors identified $3.5 billion of crypto assets, of which $1.6 billion are associated with FTX. Solanas’ SOL, FTX’s FTT, and some liquid assets like DOGE, Aptos, XRP, MATIC, and BIT are major holdings. Liquidators have valued the token with the price at the time of bankruptcy filings.
Adam Cochran and Cinneamhain Ventures commented on the situation, saying:
“So liquidators were counting token prices on the day of filing and consider the $529 million of FTT to ‘liquid’ in this calculation, as well as $685 million of Solana, which would mega nuke the SOL market.”
After Effects
Adding that only “liquid” tokens were taken into account here, and the rest would be dumped in the market, is sure to pull the price south.
This was the case with liquid tokens; some illiquid crypto tokens have also been identified, which can be sold off, further intensifying the price crash.
What else in the bag- “illiquid”?
Leo Schwartz reported on January 18, 2023, regarding the FTX report, highlighting the list of nearly 10 billion illiquid tokens, including Serum (SRM), LUNA, & Solana-wrapped versions of ETH and BTC.
Along with some unknown projects like TRUMPLOSE, MEDIA, and BEAR.
Leo underlined TRUMPLOSE to be an “Easter egg” tying FTX and Alameda with their support of Democratic politicians and large donations. FTX holds 14 million of these prediction tokens, issued at the time of the US presidential election. Traders were to purchase TRUMPWIN or TRUMPLOSE tokes, which would resolve to $1 with the results.
BEAR Coin was a bit philanthropistic in nature, a cryptocurrency designed to help animals by raising decentralized funds with cooperation with animal lovers and some NGOs. They have 19 million of them.
The balance sheet also shows 8.3 million tokens from Media, a bandwidth-sharing network. Along with 9.8 billion MAPS tokens from Maps.me and nearly 10 billion OXY tokens from Solana-based DeFi broker Oxygen.
The list of illiquid assets includes 2.4 billion Alium Finance (ALM), 277 million Bonafida (FIDA), BRZ, GT, HRXO, JSOL, LIKE, AELPH, XSUSHI, and JET holdings.
Dumping effect
FTX needs liquidity to pay off debts; they also have the means to do that, but looking at the market’s current condition along with the fundamentals. Some chances dumping such huge amounts would adversely affect the market.
Weeks after the FTX collapse, the market fell face down and is somehow finding its feet under it; another blow may or may not be catastrophic.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
