September 13, 2023 at 11:18 GMTModified date: September 13, 2023 at 11:18 GMT
September 13, 2023 at 11:18 GMT

FTX amends plans to sell $7billion in crypto

The initial strategy by FTX had been questioned due to its potential influence on the larger crypto market.

FTX amends plans to sell $7billion in crypto

Bankrupt crypto exchange FTX has adjusted its strategy for selling $7billion in crypto assets. The move follows concerns from the US Trustee, the Department of Justice’s bankruptcy division. The initial strategy by FTX had been questioned due to its potential influence on the larger crypto market.

In relation to FTX’s original proposal, the US Trustee suggested that major sales of assets, particularly Bitcoin ($BTC) and Ether ($ETH), should be announced to the public. 

Addressing this, FTX has now agreed to inform both the US Trustee and its creditor’s committees privately about upcoming sales. But, the exchange won’t be making public announcements ahead of these transactions.

The official filing said: “In the event that the Debtors determine… to commence sales of Bitcoin, Ether or certain insider-affiliated tokens through an Investment Manager, the Debtors shall provide ten business days’ prior written notice.” 

Judge John Dorsey will be reviewing FTX’s updated proposal in a Delaware courtroom and is scheduled to make a decision today, 13 September.

FTX causes Bitcoin price drama 

FTX, previously a major entity in the crypto world, is currently seeking ways to recover assets after its bankruptcy last year. To make good with investors, the exchange is looking for regulatory approval to liquidate crypto assets worth $7bn. 

FTX’s earlier suggestion in August was to have Galaxy Digital manage the asset sale. If this gets approved, FTX will be selling assets to up to $100m every week. Depending on the token, this could go up to $200m.

Some of FTX’s assets include $1.16bn in Solana ($SOL) and $560m in Bitcoin. A court approval could mean increased selling pressure on these cryptocurrencies. 

Both Bitcoin and Solana have already experienced this pressure, even before FTX’s offloading has been approved. 

BTC dropped below the $25,000 mark on 11 September in the lead up to this decision. This price point was its lowest in three months. 

Due to FTX’s substantial holdings in Solana, its price also crashed. On 10 September, Solana’s value decreased to $17.85, from $19.45. As of now, it’s trading at $18.22. 

Ethereum also saw a dip. It dropped to $1,533 on 11 September, a six-month low. 

Community reactions

Following the news, users on X (formerly Twitter) shared their concerns about FTX’s potential sell-off. Some users predicted significant price drops in Solana following the sale. 

One community member wrote: “SOL is going to dump hard after FTX sells its bag, going to reach 14$ soon.”

However, others emphasised the structured selling plan will ease pressure.

As per FTX’s bankruptcy filings, there are specific conditions attached to the sale of tokens. These measures aim to mitigate market impact while allowing FTX to repay its creditors.

Investors will find out today, 13 September, whether this sale plan has been approved. 

Meanwhile, Sam Bankman-Fried, founder of the cryptocurrency exchange, is being held at the Brooklyn Metropolitan Detention Center. He was charged with multiple crimes, including wire fraud and money laundering. 

Bankman-Fried’s trial is scheduled to begin on 2 October.