The price of Solana (SOL), one of the top 20 altcoins, fell below $18.50 last week, signaling a sell-off. Rumors suggest that the sell-off is due to the bankruptcy of a cryptocurrency exchange, which will sell all of its crypto assets, including SOL, if approved by the Delaware Bankruptcy Court on September 13th. However, the situation is not as it seems.
FTX to Sell $3.4 Billion Worth of Crypto Reserves
According to reports, the bankrupt cryptocurrency exchange FTX has requested approval from the court to sell its reserves of SOL, FTX Token (FTT), Bitcoin (BTC), Ethereum (ETH), and other cryptocurrencies, totaling $3.4 billion. SOL constitutes a significant portion of FTX’s reserves, and if approved, the exchange will have the opportunity to sell all of its SOL assets.
It is estimated that SOL holds the lion’s share of FTX’s $3.4 billion crypto reserves. The latest reserve data from January 17th indicates that approximately $685 million of FTX’s crypto reserves are in SOL, $529 million in FTT token, $268 million in BTC, $90 million in ETH, and the rest in Aptos (ATP), Dogecoin (DOGE), Polygon (MATIC), XRP (XRP), and various stablecoins.
Can FTX Sell All of Its SOL Holdings?
It is claimed that if FTX receives approval from the court, it will be able to sell all of its SOL assets. However, an important detail is being overlooked: the SOL held by FTX borrowers is not immediately available for sale. Contrary to the impression created by the shared visuals, these SOL assets are subject to a lock-up agreement.
FTX, in partnership with Alameda Research, previously obtained 16% of the SOL supply directly from the Solana Foundation. This acquisition was subject to another lock-up schedule under certain conditions. The current balance of 47.51 million SOL, which corresponds to 8.82% of Solana’s total supply, is also subject to this agreement. This agreement indicates that the claim that SOL assets under FTX’s control can be easily bought and sold and are ready for sale does not reflect the reality. In reality, all of these SOL assets are currently locked and can only be sold following a linear vesting process from 2025 to 2028.
According to the terms of the agreement, the lock-up of the SOL allocated to FTX will gradually be released on a monthly basis until January 2028. Additionally, certain portions, such as 7.5 million SOL acquired by Alameda Research from Solana Labs, will only be accessible starting from March 1st, 2025. Another portion consisting of 61,853 SOL will be accessible on May 17th, 2025. Therefore, claims that FTX will sell all of its SOL assets in a way that could potentially impact the price are nothing more than FUD.
