Markets are on edge as FTX, the beleaguered centralized exchange, gears up for a massive sell-off of digital assets, pending court approval. This development, coming hot on the heels of FTX’s bankruptcy filing last November, is sending shockwaves throughout the crypto world.
On August 24, FTX took a significant step by filing a motion with the United States District Court for the District of Delaware. The motion outlines FTX’s plans for Galaxy Digital to handle the sale of assets on its behalf. All eyes are now on the court, which is set to make a crucial decision on September 13.
Should the court greenlight the proposal, Galaxy Digital would embark on selling up to $200 million worth of assets on a weekly basis. For the initial week, the limit is capped at $50 million, but it would then rise to $100 million, with FTX having the option to request further increases up to $200 million, subject to the court’s discretion.
FTX’s vast holdings in digital assets have raised eyebrows, with over $1.1 billion in SOL, substantial sums in BTC and ETH, and substantial positions in Aptos (APT) and Stargate (STG).
The looming verdict has already had a tangible impact on the market. SOL, in particular, bore the brunt of the uncertainty, posting an 8.1% loss over the past week. APT and FTT also suffered setbacks, recording declines of 7.8% and 6.5%, respectively, in the past week and day.
FTX, in defence of its asset sell-off strategy, claims it’s acting in the best interests of its debtors. The exchange argues that the extreme volatility inherent in the crypto markets poses a significant risk. They contend that this volatility could lead to downward price swings, potentially limiting the value of the estates held by FTX.
Additionally, FTX is embarking on a quest to recoup funds spent on celebrity endorsements. Court documents from last week reveal efforts to claw back millions of dollars paid to celebrities like former pro basketballer Shaquille O’Neal and tennis star Naomi Osaka, along with other athletes and teams. FTX has also filed to recover a $21 million investment in LayerZero Labs.
The crypto community is now anxiously awaiting the court’s decision on September 13, as it will undoubtedly set a precedent for the future of FTX and the broader crypto market. As the crypto world braces for this seismic event, traders and investors are advised to remain vigilant, as the outcome could significantly impact their portfolios.