The week is set to be a busy one for the legal team of the FTX crypto exchange. The company is seeking approval for liquidating crypto assets valued at $3.4 billion.
In addition, its legal team has also filed a lawsuit against an on-chain interoperability protocol named LayerZero for recovering lost crypto assets that are valued at $21 million.
The proposal
Officials of the Delaware Bankruptcy Court are scheduled to issue a ruling on September 13th about the request for asset sale worth $3.4 billion that the FTX lawyers had submitted.
Outlined back in August, the proposal in question would appoint Galaxy Digital’s Mike Novogratz as the investment manager who would be responsible for selling the assets.
The plan dictates that the now-defunct crypto exchange would be permitted to sell tokens every week worth $100 million.
This limit could be increased on an individual token basis to $200 million. As of January 2023, it has been estimated that the crypto holdings of the FTX exchange include a number of assets.
It has FTT tokens, which are the exchange’s own native ones, which are valued at $529 million, while Solana tokens worth $685 million are also present.
The holdings also include Bitcoin worth $268 million, Ether valued at $90 million, $29 million worth of XRP tokens, Polygon worth $39 million and Dogecoin and Aptos worth $42 million and $67 million, respectively.
There are stablecoins as well and more crypto tokens valued at $1.2 billion are also held on third-party exchanges.
Market decline
Kaizen.Finance is a multi-chain asset management platform and its founder, Evgen Verzun, said that there is a major impact on the crypto market before any large-volume sales take place.
He cited the recent sale made by Vitalik Buterin as an example and said that there is a downward movement in the market even before the sale happens.
He went on to say that it was the same in this instance and the market would see a decline before the sale started.
According to CoinGecko, there was a 4% drop in the price of the Solana token. But, other market observers believe that the sell-off would pan out in a different way.
Different sentiments
Messari, the crypto market intelligence firm, noted that the absolute value of the crypto tokens held is not the relevant number, but the amount relative to the actively trading volume of the assets.
The USD value of the Solana and Aptos tokens is substantial and the market volume would be substantial as well.
However, it should be noted that the tokens are mostly held on the venture side of the company and are mostly vesting tokens, which means that they do not have a lot of liquidity in open markets.
Other market watchers have also echoed the same sentiments. According to Crypto Rand, the SOL tokens are also bound by a vesting schedule until 2025.
This means that whoever buys the tokens would have to abide by the said schedule. This means that it would unlikely to impact the short-term price of the SOL token.