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Prior to the bankruptcy hearing, an FTX-affiliated wallet transfers $10 million worth of alternative cryptocurrencies

ftx-solana-wallet

Source: AdobeStock / Rafael Henrique

FTX’s Solana wallet, associated with the bankrupt crypto exchange, has transferred $10 million worth of alternative cryptocurrencies to the Ethereum network via the Wormhole bridge over the past four days. This has raised concerns about the potential for further token sell-offs in the market.

In a previously submitted filing from the month before, FTX debtors outlined a structured approach to cryptocurrency sales aimed at preventing adverse effects on market prices. The proposal suggests imposing a weekly limit of $100 million for most token sales, with the option to increase this cap to $200 million on a case-by-case basis.

The filing also establishes specific guidelines for the sale of certain cryptocurrencies, such as Bitcoin and Ether, categorizing them as “insider” assets. To ensure transparency and guard against sudden market fluctuations, the proposal recommends providing a ten-day notice period to both the Committee and Ad Hoc Committee of creditors before initiating any sales of these assets.

It’s worth noting that while this filing is not currently legally binding, it is scheduled for review by the Delaware Bankruptcy Court on September 13.

In an earlier disclosure in April, FTX debtors unveiled their crypto holdings, totaling $3.4 billion.

While the breakdown of holdings in more liquid assets like Bitcoin and Ether remains undisclosed, the estate has publicly disclosed its holdings of relatively illiquid tokens, shedding some light on the composition of its portfolio.

To further protect the interests of creditors and maintain a cautious approach to asset management, FTX debtors plan to enlist a financial adviser to oversee the estate’s token sales. This approach aims to minimize the potential impact of these sales on token prices, particularly for tokens with limited liquidity.

In an effort to mitigate price volatility, FTX debtors are also considering hedging their holdings in Bitcoin and Ether. This strategic move could help secure more stable proceeds from the sale of these assets. Additionally, the estate is open to staking certain tokens, potentially yielding returns and bolstering the pool of funds available for creditors.

Previously, the bankrupt crypto exchange had proposed appointing Mike Novogratz’s Galaxy Digital Capital Management to oversee the sale and management of its recovered crypto holdings.

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