October 16, 2023 at 10:40 GMTModified date: October 16, 2023 at 10:41 GMT
October 16, 2023 at 10:40 GMT

FTX bankruptcy estate stakes $SOL & $ETH to earn yields

The FTX bankruptcy estate has staked a multi-million dollar worth chunk of $ETH and $SOL behind SBF’s ongoing fraud trial.

FTX bankruptcy estate stakes $SOL & $ETH to earn yields

FTX’s bankruptcy estate has staked a multi-million dollar worth chunk of Ether ($ETH) and Solana’s $SOL behind crypto mogul Sam Bankman-Fried’s (SBF) ongoing fraud trial.

The activity noted on blockchain addresses tied to the crypto exchange showed staking of a total of 5.5 million $SOL and just over 24,000 $ETH.

At current prices, the former chunk is worth $122million and the latter is worth $30m. These can be viewed in the separate transactions on the blockchain on Etherscan.

The addresses are controlled by a creditors’ group of the now-bankrupt crypto exchange. These tokens were staked to earn yield last weekend.

Staking is the activity where investors lock crypto assets for a set period of time to help support the operation of a blockchain. In return for staking their crypto, they earn more cryptocurrency. It can only be possible on blockchains that use a proof-of-stake consensus mechanism like Ethereum and Solana.

As per on-chain watchers on X (formerly Twitter), the $SOL tokens were staked on Figment, a digital asset staking platform built for institutions. Here, the FTX’s addresses will earn 6.79% annualised on the holdings or over $8 million in $SOL tokens which gets compounded.

The Ethereum ones, on the other hand, were noted to be directly staked on the network. Here, it’s set to earn 3.4% annualised currently or $1m in $ETH tokens.

As per a court filing that was revealed in September, the estate of defunct FTX held around $7billion in assets, including $1.16bn in $SOL and $560m $BTC. The exchange has also been an early investor in Solana and regularly receives a significant volume of $SOL unlocked according to a planned vesting schedule.

The latest activity on FTX’s bankruptcy estate addresses comes in as the highly-followed fraud trial of SBF enters its third week. It has now wrapped up the testimonies of the trial’s star witness Caroline Ellison, the former CEO of Alameda Research and SBF’s one-time girlfriend.

While on the stand, she disclosed many things, from Alameda’s misleading balance sheets sent to lenders to an unrelated bribery incident with Chinese officials to retrieve locked funds.

Ellison had pleaded guilty to fraud and conspiracy charges last year and in her recent testimony had revealed that Bankman-Fried had “directed” her to steal customer money.

“He was the one who directed us to take customer money and repay our loans”, said the former Alameda CEO as she maintained that SBF kept on instructing her to use FTX customer funds in order to repay Alameda’s lenders despite being aware of the looming risk.

On 11 October, Judge Kaplan also denied multiple requests from Bankman-Fried’s defence team. This was to mention the founder’s charitable giving and the lack of clear US crypto regulations.

In doing so, Kaplan stood in favour of a previous government proposal aimed at barring the defence from mentioning FTX’s sizeable stake in Anthropic.

Anthropic is an artificial intelligence (AI) start-up whose valuation has surged in recent months, which the defence potentially hoped to use in showing the jury that FTX could have survived if SBF’s investments had been given a bit more time to play out.