FTX Estate Sells SOL Tokens at Significant Discount, Sparks Creditors' Criticism
Summary:
The FTX estate recently sold over half its Solana (SOL) tokens at a 63% discount, generating around $1.9 billion for the bankrupt exchange's creditors. This sale sparked criticism as it involved unvested tokens. Renowned entities like Galaxy Trading and Pantera Capital showed investment interest, raising substantial funds for the purchase. Former FTX CEO Sam Bankman-Fried faces a 25-year sentence for fraud after the exchange's collapse, prompting creditors to allege violation of their property rights by the liquidators. Further, these creditors have initiated a class action against Sullivan and Cromwell for representing the exchange during bankruptcy proceedings despite alleged prior involvement in fraud.
On April 5, Bloomberg reported that the FTX estate parted ways with over half of its Solana (SOL) tokens, sold at a markdown of 63% from their current value. The majority of the insolvent exchange's assets are in SOL tokens. Asset managers and venture capitalists, such as Galaxy Trading and Pantera Capital, showed interest in the sale, individuals acquainted with the situation informed Bloomberg. The insolvent exchange disposed of between 25 million to 30 million unvested SOL coins at $64 apiece, therefore accumulating near $1.9 billion for FTX's creditors. FTX's early investment in Solana resulted in 41 million SOL tokens, all bound by a four-year vesting schedule, preventing them from being traded until the vesting period ends.
CoinMarketCap currently quotes the SOL token at $176, displaying a formidable 743% increase over the preceding 12 months, driven by the bounce-back in the crypto markets and a surge in memecoins.
Galaxy Trading, a subdivision of Mike Novogratz's Galaxy Digital, reportedly collected approximately $620 million to acquire SOL tokens from the FTX estate. Investors can incur a 1% management fee. According to insiders, the fund also aims to yield returns for its investors through staking. Galaxy Asset Management, another Galaxy Digital arm, helped expedite the exchange's asset sale.
Bloomberg reported that Pantera Capital also amassed $250 million to purchase SOL tokens from the FTX estate. Additionally, Neptune Digital Assets, a Canada-based blockchain firm, bought 26,964 SOL tokens at $64 each on March 27.
Critics, primarily the creditors of the exchange, have expressed displeasure over the FTX assets sale at such slashed prices. Following the exchange's meltdown in November 2022, Sam Bankman-Fried, the former FTX CEO, was handed a 25-year prison sentence on fraud allegations on March 28. Creditors maintained during the sentencing that the liquidators of the exchange violated the creditor's "property rights". FTX creditor Sunil Kavuri claimed, "They have turned billions in crypto assets liquid. An S&C token [Sullivan & Cromwell] sold for 11 cents; it is currently valued at two dollars. FTX possessed $10 billion [misprint] worth Solana tokens — they parted with it at a 70% reduction."
FTX creditors have initiated a class action against Sullivan and Cromwell, claiming the agency was complicit in the fraud before acting as the exchange's representative during the bankruptcy proceedings.
Published At
4/6/2024 12:43:22 AM
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