FTX creditors have expressed strong disapproval over the sale of Solana (SOL) tokens, valued at approximately $1.9 billion, by the bankrupt exchange at a 62% discount.
According to Bloomberg, FTX administrators sold about two-thirds of the company’s SOL reserves, worth $2.6 billion. Sources revealed that 25-30 million tokens were sold at $64 each, while the asset was trading above $170 on the day of publication.
The primary buyers were Galaxy Trading and Pantera Capital. Bloomberg reported that Mike Novogratz’s Galaxy Digital raised $620 million for this transaction through a specially created fund. The firm will offer clients staking income from the coins, charging a 1% management fee.
Earlier this year, it was revealed that Pantera Capital also plans to raise up to $250 million to purchase SOL from FTX.
The tokens owned by the exchange are locked in a vesting schedule and will gradually become available over four years. Investors could gain significantly if SOL’s price remains stable or rises. Conversely, there could be substantial losses, as the coin’s value plummeted 97% during the previous bear market phase, Bloomberg noted.
Investors Cry Foul, Suggest Corruption
However, creditors felt deceived. Community activist Sunil Kavuri claimed the deal “destroyed billions of their wealth.”
Bloomberg reported what I said at SBF Sentencing
Sullivan and Cromwell sold 2/3 of our $2.6bn Solana at $64 — a massive 62% discount to $172
Galaxy — mandate seller — bought majority themselves
Galaxy is a client of S&CThis has destroyed billions of value for FTX creditors pic.twitter.com/LD9Wge6t3r
— Sunil (FTX Creditor Champion) (@sunil_trades) April 5, 2024
He hinted at corruption, pointing out that Galaxy Digital manages FTX’s assets and is a client of Sullivan & Cromwell, the exchange’s liquidator. Novogratz’s firm acquired the majority of the cryptocurrency.
Kavuri’s post sparked a flurry of comments, mostly supporting his stance.
It’s absolutely disgusting mate , our property has been embezzled not once , but now twice!!!
— $?? ₿LOCK HEAD (?,?) (@slapmylovespuds) April 6, 2024
“It’s absolutely disgusting, mate, our property has been embezzled not once, but now twice!!!” wrote one user.
On March 28, a court sentenced former FTX head Sam Bankman-Fried to 25 years in prison on seven charges, including fraud. Some commentators expressed hope that Sullivan & Cromwell would also face consequences “for stealing their funds” in the future.
Is there someone leading this on the creditor’s side. I, for one, would seriously pursue this in a group to sue the fuck out of S&C. It would be a easy win. We just need to organise.
— DeGenio (@Wahlau88) April 6, 2024
“Is there someone leading this on the creditor’s side? I, for one, would seriously pursue this in a group to sue the fuck out of S&C. It would be an easy win. We just need to organise,” suggested a trader under the pseudonym DeGenio.
However, some supported the liquidators’ decision. A user named Bitcoin economist noted that due to the four-year lock-up period, there would likely be few buyers for the assets.
But locked up for 4 years — very few buyers would take that deal. Sol below 20 not long ago. Good deal for creditors
— Bitcoin economist (@Bitcoineconprof) April 5, 2024
“Not long ago, SOL was below $20. Good deal for creditors,” he concluded.
In response, Kavuri wrote that he knows of at least six groups that liquidators prohibited from selling cryptocurrency. Regarding vesting, he noted that unlocks will begin in the coming months.
Back in February, representatives from Sullivan & Cromwell assured that FTX creditors would receive 100% reimbursement of assets.