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Cryptocurrency News Articles

Solana Foundation Takes Major Financial Hit Amid FTX Collapse

Apr 19, 2024 at 09:07 am

The Solana Foundation faces a significant financial setback due to its exposure to the collapsed FTX cryptocurrency exchange. The Foundation holds substantial assets stranded on FTX, including millions of dollars worth of cryptocurrencies and common stock. The collapse of FTX and the fall of its founder, Sam Bankman-Fried, have negatively impacted Solana's native token, SOL, which has plummeted in value by over 50% in the past week. The Foundation's close ties to FTX have raised concerns among investors and developers, leading to a decline in the value of Solana's ecosystem, including its decentralized finance tokens and digital assets.

Solana Foundation Takes Major Financial Hit Amid FTX Collapse

Solana Foundation Suffers Significant Financial Exposure in FTX Collapse

The Solana Foundation, a non-profit organization supporting the development and promotion of the Solana blockchain, has disclosed a substantial exposure of its assets to the collapsed FTX crypto exchange and its affiliates.

On Monday, Solana released a statement acknowledging the extent of its involvement with FTX and its trading arm, Alameda Research. As of November 6, 2022, the Solana Foundation held the following assets on FTX accounts:

  • 3.24 million shares of FTX Trading LTD common stock
  • 3.43 million FTT tokens
  • 134.54 million SRM tokens

These assets, with a combined estimated value of tens of millions of dollars, remain stranded on FTX and inaccessible due to the exchange's suspension of withdrawals.

The exposure to FTX is particularly concerning given the company's bankruptcy filing and the liquidity crisis that precipitated it. The value of the FTT (FTT-USD) token, the native cryptocurrency of FTX, has plummeted since the crisis began, reflecting the uncertainty surrounding the exchange's future.

Solana's close ties to FTX and Alameda extend beyond the stranded assets. The blockchain platform received a $314 million investment from Alameda in early 2021, a significant endorsement from the now-defunct crypto giant.

The Financial Times reported that FTX held $982 million in SOL, Solana's native cryptocurrency, as of a balance sheet shared with investors shortly before the bankruptcy filing. This exposure has raised concerns among investors and developers about the vulnerability of the Solana ecosystem to the FTX collapse.

The value of SOL has been severely impacted by the FTX crisis, dropping over 50% in the past week and marking a significant decline from its all-time high in November 2021.

Solana's decentralized finance (DeFi) tokens, known as "Sollet assets," have also suffered, with their value plummeting. Many of these tokens were believed to be listed, issued, and backed by FTX, further highlighting the ripple effects of the exchange's collapse on the Solana ecosystem.

As the FTX debacle continues to unfold, the Solana Foundation and the broader crypto community are grappling with the implications of the exposure to the failed exchange. The full extent of the financial impact on Solana and the broader blockchain ecosystem remains to be seen.

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Other articles published on Dec 25, 2024