Following the FTX crash in November 2022, the exchange’s wallets still contained a significant amount of crypto worth billions of dollars. These tokens remained untouched for a long time due to the ongoing legal battle between the exchange and its creditors. However, recent activities indicate that a large portion of these tokens are now being moved out of the FTX wallets.
The Concerning Movements
The FTX wallets currently hold substantial amounts of various tokens, including Solana (SOL), which constitutes a significant portion of the funds. As one of the major supporters of the Layer 1 blockchain, FTX received a substantial number of vested SOL tokens. Therefore, when the wallets begin moving tokens, it becomes a cause for concern.
An X user recently drew attention to the large amounts being transferred out of the FTX wallets. The tokens include SOL, SPL tokens, Wrapped Bitcoin, Ethereum’s ETH, FTX’s FTT Token, Sushiswap’s SUSHI, and Uniswap’s UNI, among others. Approximately $14 million worth of assets have already been moved. The X user specifically highlighted the roughly $200 million worth of Wrapped Bitcoin (WBTC) on the Solana network held in the wallets.
Although the assets were transferred to another holding wallet using the Wormhole Bridge, there have been speculations about a potential sell-off. The destination of these tokens was not a crypto exchange, but that has not stopped the rumors and concerns from circulating. The X user’s tweet suggesting that FTX is “gearing up for potential sell-offs” has intensified these speculations.
Connection to Galaxy Digital
To shed some light on the movements, it is crucial to consider the developments that took place at the end of August. FTX filed a motion with the court to seek permission to engage asset manager Galaxy Digital in hedging its remaining assets against volatility. The Investment Services Agreement would allow Galaxy Digital to take control of FTX’s assets, protecting their value and profiting from investment decisions made by the asset management team.
Given that the asset transfers began a week after this filing, it is plausible to assume that FTX is moving assets into the custody of Galaxy Digital. However, even if this is the case, it could still result in a potential sell-off since FTX would be authorized to sell up to $100 million worth of tokens per week in order to obtain the most favorable terms.
It is worth noting that these coin movements come just one month before FTX founder Sam Bankman-Fried is expected to face trial on fraud and mismanagement charges. While SBF’s defense may file a motion to postpone the trial date, for now, it appears that he is set to go to trial on October 3.
The recent movement of tokens from FTX wallets raises concerns within the crypto community. With billions of dollars’ worth of assets at stake, any activity involving significant transfers is closely monitored. While it is unclear whether these movements indicate an impending sell-off or a strategic decision to protect asset value, the situation warrants careful observation. Additionally, the legal proceedings involving Sam Bankman-Fried add another layer of complexity to the overall situation. As the trial date approaches, the entire crypto industry eagerly awaits the outcome and its potential impact on FTX and the wider market.
Featured image from Unsplash, chart from Tradingview.com