Solana at risk? FTX wallets move SOL holdings

If the huge SOL holdings from the collapsed crypto exchange FTX reach the market, a sell-off seems inevitable.

It seems like a broken relationship that is still not over: Solana and the toppled crypto exchange FTX. Even after the spectacular split from just over a year ago, the former Sam Bankman-Frieds company apparently still has a lot of influence over the (once) "fastest blockchain in the world." For as months ago unveiled by the Solana Foundation, FTX and its also toppled sister company Alameda Research hold huge stocks of the cryptocurrency. Reportedly some 60 million SOL tokens worth US$1.1 billion.

Different on-chain data now show that parts of these and other altcoin holdings of FTX are on the move. This is possibly a sign of the imminent liquidation of assets by the crypto exchange's trustees. They received court approval for this back in January. Their goal: to sell secured crypto assets worth a total of five billion US dollars to compensate customers of the exchange who suffered losses. The day that may give many Solana investors sleepless nights seems to be getting closer and closer.

FTX: de explosieve Solana whale

FTX's immense SOL holdings: a sword of Damocles that has the same significance for Solana as the BTC holdings of the collapsed Mt. Gox exchange for Bitcoin. If liquidated in their entirety, the price of SOL would most likely collapse. Many observers therefore predicted a quick death for Solana in the aftermath of the FTX crash. Any hope of a comeback inevitably depends on the outcome of the FTX lawsuit and the handling of these holdings.

The crypto community, meanwhile, is speculating about how many coins the company's liquidators might even sell. Most of the holdings are "under lock and key," according to X (formerly Twitter) and Solana Compass. Only between 2025 and 2027 would they become liquid. According to on-chain data, SOLs recently initiated amount to only seven million units, the equivalent of US$134 million. While this would be much more bearable for the market for now, it would still be a large portion of the current daily trading volume. The negative news already seems to be having an effect. In recent days, SOL slipped below the important $20 USD price level.

Solana founder with idea for a win-win

Solana founder Anatoly Yakovenko is also apparently unclear about the liquid SOL holdings of his former investors, referring to the on-chain data. But he hopes for a "less bad outcome for everyone" than simply selling the tokens on the market. His "wish" would therefore be to "distribute the SOL directly to all FTX customers." They would then be able to make their "own decisions." Direct distribution to "five million users" would also have long-term potential for the network. A "win-win," according to Yakovenko.

Whether FTX customers will want to deal with cryptos at all, however, remains to be seen. There are probably plenty of aggrieved parties who "just want their money back" after a year, as some users responded. So if it's not the new management selling the tokens, it's probably the customers themselves. The result would remain the same. To get rid of the FTX curse as soon as possible, the Solana Foundation might instead consider a token buyback. On a similar note, the Robinhood trading platform recently freed himself from the empire of Sam Bankman-Fried.

However, according to the figures cited at the beginning, FTX along with Alameda Research own about one in 10 SOL tokens. Both are also active strikers and are reportedly still waiting for the release of large SOL holdings out of their seed investment. So a buyback would be more than expensive - perhaps impossible. So the FTX saga is likely to accompany Solana's ecosystem for a while longer, like a chronic illness that now seems to be entering its final phase. It is quite conceivable that they would now prefer a short but painful leg break. However great the damage, once Solana is purged of FTX and Alameda, a true new beginning would finally be in sight.