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Bankrupt FTX Prepares for Massive $3.4 Billion Crypto Liquidations

Bankrupt FTX Prepares for Massive $3.4 Billion Crypto Liquidations

The cryptocurrency sphere is on tenterhooks, anticipating substantial developments in the upcoming week. At the epicenter of this brewing storm is the embattled crypto exchange, FTX. Sources suggest that the exchange is poised to secure court clearance to initiate liquidations for a staggering $3.4 billion worth of cryptocurrencies.

With whispers pointing to FTX possibly getting the nod by September 13, stakeholders across the industry brace for potential market upheavals.

FTX Liquidations: A Damper on the Bullish Drive?

Renowned cryptocurrency analytical body, IntoTheBlock, voiced concerns that the imminent FTX liquidations might overshadow recent positive market trends, particularly for Ethereum and Solana. They observed, “Even with Visa’s upbeat news and a potential spot for ETH ETF on the horizon, the FTX’s looming $3B liquidation seems to be steering the market’s course.”

Yet, the winds of panic might be blowing prematurely. Esteemed crypto pundit, Hitesh.eth, posits that the actual liquidation process may not commence immediately post the court’s approval.

For context, FTX’s legal filings showcase an intention to offload a capped amount of $100 million in cryptocurrencies weekly, with occasional surges up to $200 million.

FTX Liquidations: Altcoins on the Firing Line

The potential clearance for massive asset offloading has sent tremors of unease, especially regarding the altcoins under FTX’s umbrella. Data reveals that Solana takes the lion’s share of FTX’s holdings, pegged at an approximate value of $685 million.

This brewing storm has led to jitters among SOL investors, evidenced by a marked 5.1% drop in its price in the past day. Currently, SOL’s value oscillates around $18.52, a stark contrast to the stability observed in numerous other digital assets.

FTX’s proprietary coin, FTT, valued at $529 million, is also in the limelight. Given FTT’s restrained liquidity, questions hover over the exchange’s liquidation strategy for this digital asset.

Notably, FTX’s arsenal also houses substantial volumes of other cryptocurrencies, including Aptos, Dogecoin, MATIC from Polygon, and XRP.

Full List Of FTX Liquidations

FTX’s Legal Gambits in Recovery Mode

FTX, grappling with its current fiscal turmoil, is deploying an array of legal tactics to recoup its assets.

In recent maneuvers, FTX launched a clawback lawsuit against LayerZero, an omnichain interoperability contender, aiming to regain $21 million. The legal dragnet also ensnared Ari Litan, LayerZero’s Chief Operating Officer, as FTX demands a hefty $13 million. Additionally, the exchange seeks a further $6.5 million from Skip & Goose, Litan’s business entity.

In another intriguing twist, FTX is mulling over the prospects of reclaiming promotional fees once generously distributed to sports luminaries like Naomi Osaka and Shaquille O’Neal. During its pinnacle, FTX splurged sizably on celebrity endorsements. For context, tennis sensation Osaka reportedly netted a cool $3.2 million for her FTX endorsement campaigns.

The upcoming week promises a riveting watch for crypto enthusiasts, with all eyes fixed on FTX’s next moves. With market stability in question, the unfolding of FTX liquidations might very well dictate the immediate future of the crypto realm.

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