FTX Bankruptcy Woes Deepen: Token Dumping and Irregularities Cast Doubt on Proceedings

FTX, the defunct crypto exchange, sold 25-30 million Solana (SOL) tokens at a significant discount to raise $1.9 billion, despite objections from creditors over unfair bankruptcy proceedings. The move is part of efforts by FTX's estate to cover the $16 billion shortfall left by former CEO Sam Bankman-Fried. Entities like Galaxy Trading and Pantera Capital reportedly participated in the sale, which raised concerns among creditors who argue that SOL's recent price increase undervalues their holdings.

FTX Insolvency: Discrepancies and Token Liquidation Undermine Bankruptcy Proceedings

As creditors of the defunct crypto exchange FTX voice concerns over perceived inequities in bankruptcy proceedings and rulings, the company has disposed of a substantial quantity of Solana (SOL) tokens at deeply discounted prices.

Under the leadership of CEO John J. Ray III and other bankruptcy administrators, FTX's estate has transacted 25 to 30 million SOL coins, valued at significantly less than current market rates. The move is part of an effort to address the $16 billion shortfall left behind by former FTX founder Sam Bankman-Fried.

According to Bloomberg, the crypto exchange generated approximately $1.9 billion from its discounted SOL sales. Various entities, including Mike Novogratz's Galaxy Trading and Pantera Capital, reportedly contributed to the sale. Sources familiar with the transaction claim that Galaxy secured a $620 million vehicle specifically to acquire SOL from FTX's distressed exchange.

Last month, Pantera disclosed plans to purchase $250 million worth of FTX's SOL, while the estate sold $1.7 million in Solana to Nepture Digital Assets.

Documents released last year revealed that Solana constituted the majority of FTX's crypto holdings. Bankman-Fried was a vocal advocate for SOL, investing heavily in its native cryptocurrency and tokens within its ecosystem, such as Sereum (SRM).

During the November trial, former Alameda Research CEO Caroline Ellison referred to Solana and other SOL-based tokens as "Sam's coins." Bankman-Fried was subsequently found guilty on seven criminal counts and sentenced to 25 years in prison.

Meanwhile, FTX creditors have banded together to challenge the ongoing bankruptcy proceedings, which they view as unfair. In January, the presiding judge ruled that each creditor should receive an equivalent value of holdings based on FTX's bankruptcy declaration in late 2022.

At the time, SOL prices hovered around $16, but as of press time, the token has surged above $175, fueling discontent among creditors. The FTX Customer Ad Hoc Committee, the largest voting bloc in the bankruptcy, has gathered 1,400 signatures in an effort to safeguard creditor rights and advocate for more favorable court rulings on the treatment of crypto claims.

The discounted sale of SOL tokens raises questions about the transparency and fairness of the bankruptcy process, as it potentially disadvantages creditors who held other crypto assets on FTX. The ongoing legal proceedings will likely determine the ultimate fate of FTX's creditors and the distribution of its remaining assets.