FTX will sell $3 billion in virtual currency: more than 7 billion has been recovered and 50 million is spent every month

Cryptocurrency exchange FTX has once again made the crypto industry uneasy.

Recently, a U.S. court filed a motion to appoint a liquidator in the FTX case and granted a sales authorization of $100 million per week. FTX is also actively bringing together scattered token assets. The upcoming sell-off may make the already bear market in the crypto industry worse.

Since FTX went bankrupt at the end of last year, it has had a lasting impact on the crypto industry. The United States, Singapore and other places have tightened their supervision of the crypto industry, and many traditional institutions have fallen into bankruptcy. Only industries such as lawyers have benefited greatly from the bankruptcy case. According to media reports, the FTX bankruptcy case has cost more than US$300 million since last year.

$3 billion in cryptocurrency to be sold

On September 6, the cryptocurrency exchange FTX posted on X (formerly Twitter): "FTX has been actively bridging tokens from various blockchains back to its native blockchain. FTX has also been migrating SOL and other tokens from existing wallets to FTX's qualified custodian BitGo."

Prior to this, FTX's X account had not released any information for 10 days.

On-chain data shows that on September 1, multiple FTX cold wallets transferred nearly 7 million SOL, worth about $134 million. Since August 31, a wallet associated with FTX has sent about $10 million in tokens to another FTX wallet through the Wormhole bridge, including $6.23 million in ETH and $4 million in altcoins such as FTT, UNI, HXRO, SUSHI, and FRONT.

In the view of industry insiders, FTX's concentration of dispersed crypto assets is undoubtedly a preparation for the subsequent liquidation, and the release of this news further proves this fact.

On August 23, court documents filed by FTX proposed a bankruptcy plan for cryptocurrency management company Galaxy Digital to liquidate the company's large number of crypto assets. Under the agreement, Galaxy Digital can sell up to $100 million per week, with the option to increase the cap to $200 million per week. Galaxy will also undertake the task of hedging BTC and ETH prices in an effort to "reduce the risk of adverse price changes faced by debtors before selling Bitcoin and Ethereum."

The document states that FTX hopes to return funds to creditors in the form of fiat currency rather than crypto assets. This would mean that all crypto assets held by FTX may be exchanged for fiat currency in the market.

In addition, FTX is worried that a one-time sale will cause a price crash and the value of its more than $3 billion in cryptocurrencies will also be reduced, so it proposed a sell-off limit.

Industry analysts said that although FTX's crypto assets will be sold in installments, this will make the already bearish crypto industry worse. In addition, the amount of crypto assets held by FTX is still an unknown and should be much greater than the $3 billion it announced.

In April this year, according to media reports, FTX had recovered approximately US$7.3 billion in crypto assets.

At present, the above liquidation agreement has not yet come into effect, and the court will review the agreement on September 13.

Regarding the possible subsequent sell-off, Solana co-founder Anatoly Yakovenko suggested that FTX distribute the SOL tokens it holds to its customers.

He stated: “My wish is to distribute SOL directly to all FTX customers, which is probably the least bad outcome for everyone. Distributing SOL to 5 million users will benefit the network in the long run, and may produce the best outcome if users can control the assets and sell their shares in an auction.”

Industry analysts said that FTX has recently transferred more than $100 million in SOL tokens. If these tokens are sold, it will have a very bad impact on Solana. The Solana public chain suffered heavy losses in the bankruptcy of FTX and has not yet recovered. However, the suggestion to distribute SOL to customers is unlikely to be accepted by the court.

Bankruptcy costs more than $300 million

Since FTX went bankrupt at the end of last year, it has had a lasting impact on the crypto industry. The United States, Singapore and other places have tightened their supervision of the crypto industry. Many traditional institutions such as Temasek and SoftBank have fallen into bankruptcy. The crypto industry is moving forward in a bear market. However, industries such as lawyers have benefited greatly from this bankruptcy case.

According to media reports, since last year, lawyers, accountants, consultants, crypto analysts and other professionals have received more than $700 million in fees from the bankruptcies of FTX, Voyager Digital, Genesis Global, Celsius Network and BlockFi, and this number will increase significantly as the cases unfold.

According to statistics from court documents of related cases, the FTX bankruptcy case cost the most, up to US$326 million, and Sullivan & Cromwell, the law firm responsible for managing the FTX bankruptcy case, has collected more than US$110 million in legal fees.

At a recent hearing, Kris Hansen, a lawyer representing the creditors' committee, denounced the high fees. He said that the fees are now close to $50 million a month, and hundreds of lawyers, financial advisors and bankers are working almost full-time on these tasks. "Every dollar spent on this case is essentially money that the creditors will not receive."

In June, Katherine Stadler, a fee examiner in the FTX case, also pointed out that the fee expenditure was very expensive by any standard.

According to media reports, the cost of bankruptcy cases is not always so expensive in the United States. In 2018, the average hourly rate of Sullivan & Cromwell bankruptcy lawyers was US$1,300, while this year it is US$2,000, an increase of 53%.

Expenses reviewer Katherine Stadler called for modest spending cuts, while creditors also called for more aggressive cuts.

Recently, Bloomberg Law reporter Roy Strom exposed the charging issues behind the FTX bankruptcy case, where some law graduates who had not yet obtained a lawyer's license participated in the case and charged high fees.