Amid the bankruptcy proceedings of crypto exchange FTX, the market is in a state of heightened anxiety, and Solana (SOL) in particular saw a 7% drop in price yesterday following the spread of rumors. FTX is scheduled to appear in Delaware Bankruptcy Court on Wednesday, September 13, to seek approval for the liquidation of $3.4 billion in SOL, FTT, BTC, ETH and other crypto assets.
The event has led to widespread concerns among market analysts and participants, who speculate that the liquidation could exert significant selling pressure on an already fragile market. As of January 17, FTX’s crypto holdings were estimated to include $685 million in Solana (SOL) tokens, $529 million in FTT tokens, $268 million in Bitcoin (BTC), $90 million in Ethereum (ETH), and various other assets such as Aptos, Dogecoin, Polygon, XRP, and stablecoins.
The Solana Situation
Solana, which represents FTX’s largest holding, experienced a sharp decline in its price yesterday. This can be largely attributed to the rumors circulating on crypto Twitter (X) suggesting a massive dump of SOL by FTX. But, as it turns out, this rumor lacks substance. A screenshot that surfaced on Twitter, detailing the assets held by FTX debtors as of January 17, 2023, confirms that FTX is in possession of approximately 47.51 million SOL.
However, there’s a crucial detail that many seem to have overlooked. The SOL tokens held by FTX debtors are not readily available for sale. Contrary to the narrative presented in the visual data shared, these SOL tokens are under a lockup agreement. FTX, in collaboration with Alameda, had previously acquired 16% of the SOL supply directly from the Solana Foundation.
This acquisition came with strings attached, namely a lockup schedule. The current stash of 47.51 million SOL, which represents 8.82% of Solana’s total eventual supply, is bound by this agreement.
Thus, the misconception that this SOL reserve is liquid and primed for a market dump is fundamentally flawed. The reality is that these tokens are locked and will undergo a linear vesting process spanning from 2025 to 2028. Accessing these funds prematurely is not an option.
As per the terms of the agreement, the SOL tokens will undergo linear monthly unlocks until January 2028. Furthermore, specific tranches, such as the 7.5 million SOL acquired from Solana Labs by Alameda Research, will only become available on March 1, 2025. Another tranche of 61,853 SOL is slated for…
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