A wallet belonging to the bankrupt cryptocurrency exchange FTX has transferred around $10 million worth of assets, sparking fears bigger, more disruptive dumps.
The transferred tokens belong to projects on the Solana blockchain and were moved to another wallet owned by the FTX exchange through the Wormhole bridge.
FTX wallet shifts $10M in crypto, a big dump of tokens could be imminent
— Ophelus.wealth (@opheluswealth) September 4, 2023
Are Fears of More Token Dumps Overblown?
While the transfers hint at potentially disruptive dumps, a filing by FTX debtors last month may protect crypto traders. In the filing, the debtors proposed a $100 million weekly limit for selling digital assets to protect the market from price fluctuations in typical cases, with a maximum limit of $200 million.
In the case of Bitcoin, Ether, and other cryptocurrencies categorized as “insider” assets, the debtors have proposed a ten-day notice to the Committee and Ad Hoc Committee of creditors before any sale happens.
FTX is not legally bound to stick by these guidelines yet though with the matter to be heard on Sept. 1 at a Delaware Bankruptcy Court.
FTX Debtors Propose Guidelines On Token Sales
In April, FTX debtors revealed having $3.4 billion worth of crypto holdings. They didn’t disclose how much they hold in large tokens like Bitcoin and Ethereum, but they did reveal the amount of smaller illiquid tokens they hold.
FTX debtors have proposed that a financial adviser oversee the sale of the estate’s tokens. They also plan to hedge Bitcoin and Ether to lower the risk of volatile price movements after the sale.
The estate could also hedge against other tokens to cushion against volatility. The estate also proposes having the option to stake some tokens. However, this option is on the condition that staking will yield more returns to the creditors.
FTX Appoints Galaxy Digital To Manage Asset Holdings
FTX appointed Galaxy Digital to manage its cryptocurrency holdings in another related development, according to a court filing.
The crypto firm, led by Mike Novogratz, will handle the sale, staking, and hedging of crypto assets owned by FTX. It will offer advisory services to FTX to limit exposure against price volatility.
FTX will conduct asset sales to reimburse creditors in traditional fiat currencies instead of cryptocurrencies such as Bitcoin and Ether.
The new management at FTX has also proposed restarting the exchange for customers outside the US. It also plans to group creditors into different categories to receive their claims.
The calls for a relaunch come after the exchange revealed it had recovered more than $7.3 billion worth of cash and liquid crypto assets.
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