• FTX debtors recently reported the discovery of $5.5 billion in liquid assets, with $3.5 billion being crypto assets.
• Two of the firm’s top cryptocurrency caches are not liquid as the company’s 47.51 million SOL tokens are locked and the firm’s FTT holdings distort the realization of actual liquidity due to FTX’s control of more than 80% of the supply.
• The discovery of locked Solana and illiquid FTT assets is likely to complicate FTX’s bankruptcy process.
FTX is a digital asset trading platform and cryptocurrency derivatives exchange that filed for Chapter 11 bankruptcy protection on November 11, 2022. Recently, FTX debtors published an update for unsecured creditors claiming the discovery of $5.5 billion in liquid assets. Of the total, $3.5 billion is in cryptocurrency assets and eleven different digital currencies were classified as “liquid assets” in the visual presentation.
However, two of the firm’s top cryptocurrency caches are not liquid as the company’s 47.51 million SOL tokens are locked and the firm’s FTT holdings distort the realization of actual liquidity due to FTX’s control of more than 80% of the supply. It has been reported that FTX/Alameda managed to purchase 16% of the SOL supply from the Solana Foundation, but there is a lockup schedule. The current stash of 47.51 million SOL equates to 8.82% of the total supply the Solana network will eventually issue over time. Presently, there is only 370,992,365 SOL in circulation and that does not include the locked tokens owned by FTX.
As for FTT, FTX holds a considerable amount of the total supply, which is a staggering 82.58%. This means that the company can manipulate the market and make it difficult for other investors to realize actual liquidity. The discovery of locked Solana and illiquid FTT assets is likely to complicate FTX’s bankruptcy process. Unsecured creditors may need to consider the long-term nature of the lockup schedule for SOL and the company’s control of the FTT supply before making any decisions about the liquidation of assets.
In conclusion, FTX’s discovery of $5.5 billion in liquid assets is a positive development for unsecured creditors, however, the presence of locked Solana and illiquid FTT holdings may complicate the bankruptcy process. It will be interesting to see how the committee of unsecured creditors handle the situation in the coming weeks.