In an intriguing turn of events, a distinct movement of roughly $10 million in altcoins was recorded from the decentralized FTX Solana Wallet to Ethereum network via the Wormhole bridge. The reason? A legal document proposed by FTX debtors detailing a structured selling plan aimed at minimizing price fluctuation. This reveals the cautious and measured attitude of the debtors, seemingly in response to fears of increased token dumps on the market.
The proposed selling method introduces a weekly limit of $100 million for selling most tokens with a caveat, the limit could be increased to $200 million on a unique token-to-token basis. Certain cryptocurrencies like Bitcoin and Ether have been singled out and meticulously placed under the “insider” asset category. This raises questions about the subjective handling of different cryptocurrencies and calls for greater uniformity.
It’s necessary to point out that this file, although important, is not yet legally binding. It is however, scheduled for consideration by the Delaware Bankruptcy Court come September 13. But does this level of transparency guarantee safety against sudden market changes? The proposal argues for a ten-day notice period to be given to the Committee and Ad Hoc Committee of creditors before sales of such assets are initiated.
FTX’s disclosure in April revealed their crypto holdings to be worth a tremendous $3.4 billion. While the distribution of holdings in more liquid assets remains undisclosed, a significant portion of relatively illiquid tokens have been made public. This discloses part of the portfolio’s structure and calls for questions regarding the transparency of holdings in more liquid assets.
The presence of a financial advisor employed to guide the estate’s token sales suggests a focus on containing the potential implications these sales might have on token prices, primarily for tokens plagued with limited liquidity.
FTX debtors’ proposed strategy isn’t limited to sell-off timings and volumes. They also seem focused on hedging their holdings in Bitcoin and Ether as a safeguard against price instability and securing stable proceeds from the future sales of these assets. The offering to stake certain tokens could potentially increase returns and contribute to the pool of funds for creditors.
Moreover, Mike Novogratz’s Galaxy Digital Capital Management has been proposed to manage the bankruptcy estate’s recovered crypto assets.
Undeniably, these suggested measures reveal an undercurrent of wariness surrounding the liquidity and market disorder the sales could cause. Yet it also highlights a proactive approach to handling insolvency, all the while balancing the interests of multiple stakeholders.
Source: Cryptonews
