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FTX Estate Generates $1.9B After Liquidating Solana Holdings

FTX estate sells majority of Solana holdings at a discount

The bankrupt cryptocurrency exchange FTX has recently sold a substantial portion of its Solana (SOL) token holdings at a significant discount, as reported by Bloomberg on April 5. According to sources familiar with the matter, the FTX estate liquidated between 25 million and 30 million locked-up SOL tokens at a price of $64 each, generating approximately $1.9 billion for the exchange's creditors.

The sale, which represents over half of FTX's total SOL holdings, attracted interest from various asset managers and venture capitalists, including Galaxy Trading and Pantera Capital. As an early investor in Solana, FTX had accumulated 41 million SOL tokens, which were subject to a four-year vesting schedule, preventing them from being traded on the market until the deadline passed.

Despite the discounted price of the liquidated tokens, the SOL token has experienced a remarkable surge in value over the past 12 months, with a 743% gain attributed to the recovery of the crypto markets and the rise of memecoins. As of the time of writing, SOL is trading at $176, according to data from CoinMarketCap.

Investors acquire SOL tokens from FTX estate, sparking criticism from creditors

Several prominent investors have taken advantage of the discounted sale of Solana (SOL) tokens by the FTX estate. Galaxy Trading, a division of Mike Novogratz's Galaxy Digital, reportedly raised approximately $620 million to purchase SOL tokens from the bankrupt exchange. The fund, which will charge a 1% management fee, also aims to generate returns for its investors through staking, according to sources. Galaxy Asset Management, another arm of Galaxy Digital, assisted FTX in the sale of its assets.

Pantera Capital, a well-known blockchain investment firm, also participated in the acquisition, raising $250 million to buy SOL tokens from the FTX estate. Additionally, Neptune Digital Assets, a Canadian blockchain company, purchased 26,964 SOL tokens at $64 each on March 27.

However, the sale of FTX assets at such a steep discount has drawn criticism from the exchange's creditors. During the sentencing of former FTX CEO Sam Bankman-Fried, who received a 25-year prison term for fraud charges related to the exchange's collapse in November 2022, creditors accused the exchange's liquidators of violating their "property rights."

FTX creditor Sunil Kavuri stated: 

"They have liquidated billions of dollars of crypto assets. There's a token S&C [Sullivan & Cromwell] sold at 11 cents; it's now trading at two dollars. FTX had $10 billion [misprint] in Solana tokens — they sold it at 70% discount."

Furthermore, FTX creditors have filed a class action lawsuit against Sullivan and Cromwell, claiming that the law firm was involved in the fraud before representing the exchange during the bankruptcy proceedings.