FTX and Alameda Liquidate $98M in Cryptocurrency (CRYPTO): Is a Larger Market Selloff on the Horizon?

• Crypto exchange FTX and its sister concern Alameda Research have been liquidating their crypto as part of its debt repayment plan. FTX creditors reject the current proposal.
• FTX continues to liquidate its crypto holdings supporting its debt repayment plans.
• FTX has announced the repayments to creditors and customers along with additional interest.
• FTX creditors have said that they’s aren’t happy with the repayment plan, and demand crypto settlements instead of USD.

FTX and Alameda Research continue to liquidate their crypto holdings as part of a debt repayment plan. However, creditors reject the current proposal, demanding crypto settlements instead of USD.

FTX and Alameda Research Liquidate Crypto Holdings

In the last month of April, crypto exchange FTX and its sister firm Alameda Research liquidated a substantial portion of its crypto holdings worth $98 million. The bankrupt crypto exchange FTX has been divesting its Solana (SOL) holdings, in order to repay its customers. Chances are that this sell-off from the cryptocurrency exchange could continue going ahead.

More Selloff Coming From FTX?

According to data from blockchain analytics firm Arkham Intelligence, tagged wallets associated with FTX and Alameda Research have initiated liquidations totaling $97.35 million in the past month. FTX’s holdings include $33.85 million worth of BOBA and $11.22 million in ETH, in addition to controlling over 78% of the FTT supply. On the other hand, Pantera Capital has absorbed most of the sales of FTX’s Solana Holdings.

The Surge In Claims

Investor interest in FTX claims has surged following the estate’s draft recovery plan, which forecasts a recovery rate of 118% for the majority of creditors. Louis Origny, the Chief Technology Officer of claim buyer FTXCreditor, which has already obtained more than 2,100 claims, foresees an uptick in claim-purchasing activities. Origny identified two factors contributing to this expectation: firstly, the disclosure statement’s reference to a potential 30% tax withholding rate for non-U.S. customers, which may prompt holders to sell their claims on the secondary market, and secondly, the incapacity of all claim holders to cash USD checks.

Conclusion

The primary issue at hand is that the bankruptcy estate halted the valuation of customer crypto assets in November 2022, coinciding with the trough of the bear market. As a result, most of the FTX creditors have been demanding their repayments back in crypto holdings, instead of the USD. Crypto exchange FTX has yet to come up with a response in this regard.