FTX's bankruptcy filing hit its mark in the second week of September after a US bankruptcy court in Delaware approved the sale of $3.4 billion worth of crypto assets.
As part of the liquidation process, the court returned $1.3 billion in petitions and assets from the government and approved $2.6 billion in cash, bringing total liquid assets to $7.1 billion.
Among the most liquid cryptocurrencies, Solana (SOL) ranks first with a value of $1.16 billion, while Bitcoin (BTC) is the second largest asset with a value of $560 million.
Other disclosed assets include $192 million Ether (ETH), $137 million Aptos (APT), $120 million Tether (USDT), $119 million XRP (XRP), $49 million Biconomy Tokens Exchange (BIT), $46 million. in Stargate Finance (STG), $41M in Bitcoin (WBTC) and $37M in Ethereum (WETH).
Bitcoin, Ether and related tokens can only be sold after giving 10 days notice to US administrators appointed by the Department of Justice. Courts have also allowed these asset forfeiture options.
A hedging reserve is useful because FTX can use various financial instruments such as futures, options and swaps to cover losses.
With many questioning its potential impact on the cryptocurrency market, the decision caught the attention of the industry due to the large number of crypto assets approved for sale.
Magazine: Are DAOs Overloaded and Inefficient? Learning from the front
Joshua Garcia, a partner at Web3-based law firm Quetzal, told Cointelegraph that deciding whether liquidation is the right decision is a challenge. He said bankruptcy courts should focus on what's best for creditors, and creditors may be more concerned about getting their money back than the possible drop in value of liquidated assets.
"Whether this decision will affect the value of the token is probably not the court's main concern. A potential or foreseeable market effect means nothing to a judge or a creditors' committee unless it completely damages the creditors, especially the court. As millions of FTX users have suffered huge losses as a result of the action, making victims as complete as possible is a priority.
The availability of billions of dollars in liquid assets also provided relief to many lenders.
Asset protection attorney Blake Harris believes liquid asset controls can be a game-changer in FTX bankruptcy cases. He told Cointelegraph that the newly acquired liquid assets could provide more flexibility in asset management, allowing for a strategic approach that balances immediate legal requirements with broader market exposure. Financial liabilities, but it is important to consider how these assets are managed to avoid similar situations in the future.
Market analysts predict that the prices of Yesolana and Aptos are more likely to experience price volatility after adjustments based on the daily trading volume of each token.
The bankruptcy court has taken steps to ensure that the liquidation of FTX assets does not burden the cryptocurrency market.
The court order allows FTX to sell digital assets on a weekly basis through investment advisors according to predetermined rules. Galaxy Digital is tasked with liquidating its assets, ensuring market stability and maximizing profits for FTX lenders.
The court permitted FTX to exercise deposit options through its qualified trustees using its personal guarantors if the Debtors reasonably determined in their business judgment that such activity was in the best interests of their assets.
There will be a $50 million cap on real estate sales the first week, and $100 million the following week. Upon court approval and prior written approval by the Committee of Creditors and the Interim Committee, the limit may be increased to $200 million per week.
Business attorney Anthony Panebianco told Cointelegraph that a court can legally allow a creditor to dispose of assets "outside the ordinary course of business" to pay creditors.
“What's amazing is that the court has taken another step to look at the whole market for the properties it allows to buy. That is, the court seeks to protect both creditors and non-creditors of FTX in the prescribed manner.
He also outlines different liquidity strategies for BTC and ETH. It says: "Court-authorized Bitcoin and Ether hedging contracts are subject to certain investment guidelines." The court held that because of Solana's large position in FTX, the hedging agreement did not include Solana among those qualified assets. All three appear to be subject to renegotiation with the regulator.
Of all the crypto assets held by FTX, Solana is the main topic of discussion due to its $1.1 billion in assets on the bankrupt crypto exchange's balance sheet. According to market analysts, those looking for a short position should be wary of the timing of the launch of tokens held by FTX, which will be fully launched in 2028.
Looking at FTX's SOL share release schedule, a significant portion of these tokens will enter the market through linear buybacks or issuances scheduled through 2028, with the largest issuance scheduled for March 2025. Most SOLs are included in the contract.
Last. Google is paving the way for AI-generated content with new policies
A linear conditional schedule provides a simple way to gradually release token balances over a period of time.
Currently, only 24% of the $1.16 billion worth of SOL tokens have been unlocked. Apart from Solana, Aptos tokens are 100% locked and will be unlocked periodically over the next few years.
In its own analysis, cryptocurrency exchange Coinbase will maintain its regulated and standardized liquidity market with tighter controls on the sale of certain "linked" tokens and the closure of FTX's SOL in 2025, it said, citing the token transition timeline.
While many experts say markets are more or less safe amid FTX's liquidity, the stock market saga is far from over, with former CEO Sam Bankman-Fried's legal team agreeing to special terms with prosecutors ahead of trial.
Furthermore, the alleged illegal nature of the exchange has seriously damaged public trust in the crypto ecosystem.
