FTX Prepares to Liquidate $3.4 Billion in Cryptos: Market Impact
The cryptocurrency market is abuzz with speculation as the next week promises significant developments. The center of attention is the beleaguered crypto exchange FTX, which is expected to gain court approval to liquidate an estimated $3.4 billion in cryptocurrencies.
Rumors suggest FTX potentially receiving this liquidation green light by September 13. Stakeholders are apprehensive about the possible adverse repercussions on the market.
Bearish Sentiments Cast a Shadow
Esteemed crypto analytical agency IntoTheBlock highlighted that the looming FTX liquidation might dampen Ethereum and Solana’s positive strides in the past week. The firm commented:
“Despite positive news about Visa and a potential spot ETH ETF, FTX’s impending $3B liquidation could be dictating market movement.”
Read more: FTX Collapse Explained: How Sam Bankman-Fried’s Empire Fell
However, panic might be premature. Hitesh.eth, a notable crypto commentator, mentioned that even if FTX secures the approval by September 13, the liquidation might not kick off immediately.
It is essential to note that FTX’s court documents indicate a desire to offload up to $100 million in digital assets weekly. This cap might occasionally be stretched to $200 million.
Altcoins Brace for Potential Impact
The possible fire sale has ignited worries, especially concerning the altcoins in FTX’s possession. Records show that Solana forms the bulkiest portion of their assets, valued at roughly $685 million.
This looming uncertainty has triggered a flurry among SOL investors, manifesting in a significant 5.1% price dip over the last 24 hours.
As of now, SOL is hovering around $18.52. This downturn sharply contrasts with most other assets, which have largely maintained their positions or faced slight dips.
Read more: Identifying & Exploring Risk on DeFi Lending Protocols
Additionally, FTT, the exchange’s proprietary token, makes up $529 million of the assets to be liquidated. FTT’s limited liquidity and market depth raise queries on FTX’s liquidation strategy for these tokens.
FTX’s portfolio also encompasses significant chunks of other cryptocurrencies like Aptos, Dogecoin, Polygon’s MATIC, XRP, among others.
FTX Ramps Up Recovery Measures
FTX is relentlessly pursuing avenues to recoup assets amid its financial woes, spawning a series of legal maneuvers.
Recently, the exchange slapped LayerZero, an omnichain interoperability platform, with a clawback lawsuit, hoping to recover $21 million. Additionally, it has set legal wheels in motion against Ari Litan, LayerZero’s Chief Operating Officer, demanding $13 million and is pursuing $6.5 million from Skip & Goose, a firm owned by Litan.
Moreover, FTX is reportedly revisiting promotional fees dished out to sports celebrities such as Naomi Osaka and Shaquille O’Neal. During its heyday, the now-bankrupt exchange lavished significant amounts on celebs for marketing drives.
For instance, Osaka pocketed $3.2 million for her association and endorsements with FTX.
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