FTX Estate sells remaining discounted Solana tokens in attempt to repay creditors

Last Updated: May 26, 2024 8:28am EDT | 3 minute read

FTX Ownership, responsible for managing the defunct exchange’s failure, has put the last of its deeply discounted Solana (SOL) tokens up for auction.

The tokens were sold to Pantera Capital and Figure Markets at a significantly reduced price as part of efforts to repay creditors and former customers.

FTX sold the Solana (SOL) token worth $2.6 billion

In an effort to compensate creditors and former customers, the FTX estate has sold the last of its Solana tokens, valued at $2.6 billion, to Pantera Capital and Figure Markets. The tokens sold for $102 each, well below the current market price of $168. Figure Markets acquired 800,000 SOL tokens, while Pantera Capital obtained the remaining lot.

As part of the agreement with buyers, a four-year vesting program for the tokens will be implemented. This structured release aims to mitigate potential market impacts arising from the large transaction.

FTX’s bankruptcy estate has so far recovered $7.3 billion in assets. However, recovery efforts have not been without controversy.

Sunil Kavuri, a creditor who leads FTX’s creditor community, criticized the company’s decision to sell assets at such deep discounts. He argued that digital assets should be returned directly to creditors and customers rather than being sold on the cheap.

Kavuri said:

“Sullivan & Cromwell has trampled on our property rights. They liquidated billions of dollars of cryptocurrencies. There is an S&C token selling for 11 cents; it is now trading at two dollars. FTX had $10 billion in Solana tokens – they sold them at a 70% discount.

His sentiments reflect broader frustrations among those affected by the FTX collapse, who have long been critical of actions taken by the estate’s bankruptcy lawyers, Sullivan & Cromwell. The court ordered an independent investigation into Sullivan & Cromwell’s role in the bankruptcy proceedings, ultimately clearing it of collusion with FTX. Despite this, criticism persists regarding the management of asset sales.

After the announcement of the bankruptcy auctions, the price of SOL fell by 4%, but the alternative Layer-1 network continues to show good price performance. SOL is currently on an uptrend that started in November 2023, reaching a high of $210.

Uncovering further corruption around FTX

FTX Group allegedly paid over $25 million in hush money to seven whistleblowers before the cryptocurrency exchange’s November 2022 collapse, according to an independent examiner’s report by Robert Cleary.

The report revealed that FTX resolved complaints with whistleblowers who raised concerns about various irregularities, including systemic issues and misleading regulators. These settlements, handled primarily by attorney Daniel Friedberg, ranged from $1.8 million to $16 million.

For example, one whistleblower received $16 million after claiming the exchange deceived regulators and lacked a proper corporate structure, while another, who worked at Alameda Research for less than three months, received $2 million for raising concerns about regulatory and governance issues.

In particular, US prosecutors are calling for a 5 to 7 year sentence for former FTX executive Ryan Salamewho pleaded guilty to campaign finance violations and operating an illegal money transmitting business during his tenure as CEO of FTX’s Bahamian branch.

Salame’s charges include orchestrating a scheme that allowed clients to use U.S.-based bank accounts without federal compliance and engaging in illegal political donations amounting to more than $100 million.

Prosecutors argue his crimes are significant, involving more than $1 billion in unlicensed transactions, and are seeking a substantial sentence to ensure adequate punishment and deter future offending.

An investigation by the British government’s Charity Commission was also conducted recently found that the Effective Ventures Foundation, a charity funded by FTXacted diligently and quickly to protect its funds following the collapse of FTX.

After the collapse of FTX, Effective Ventures revealed its links to the exchange, prompting a regulatory investigation. The charity repaid $4.3 million to FTX’s estate, equal to the total amount received by FTX and its foundation in 2022.

Effective Ventures interim CEO Zachary Robinson said EV UK and EV US have collectively repaid $26.8 million to FTX’s assets, covering all funds received.

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