The cryptocurrency market is abuzz with speculation as significant developments are promised next week. The center of attention is embattled crypto exchange FTX, which is expected to get court approval to liquidate an estimated $3.4 billion in cryptocurrencies.
Rumors suggest that FTX will potentially get the green light for this liquidation by September 13th. Stakeholders are apprehensive about the possible adverse impact on the market.
Bearish sentiments cast a shadow
Reputable crypto analytical agency IntoTheBlock highlighted that the impending FTX liquidation could slow down the positive progress of Ethereum and Solana over the past week. Firm commented,
“Despite positive news about Visa and a potential spot ETH ETF, FTX’s impending $3B liquidation could determine market movement.”
Read More: FTX Collapse Explained: How Sam Bankman-Fried’s Empire Collapsed
However, panic may be premature. Hitesh.eth, a notable crypto commentator, mentioned Even if FTX receives approval by September 13, liquidation may not begin immediately.
It is important to note that FTX’s court documents indicate a willingness to sell up to $100 million of digital assets weekly. This limit may sometimes be increased to $200 million.
Altcoins Prepare for Potential Impact
The potential fire sale has raised concerns, especially with regard to altcoins in FTX’s possession. Records show Solana constitutes the largest portion of his wealth, valued at approximately $685 million.
This growing uncertainty has created panic among SOL investors, resulting in a significant decline of 5.1% in the last 24 hours.
FTX’s crypto holdings. Source: TheDeFi Investor
Currently, SOL is hovering around $18.52. This downturn is in contrast to most other assets, which have largely held their ground or suffered minor declines.
Read More: Identifying and Exploring Risks on DeFi Lending Protocols
Additionally, FTT, the exchange’s proprietary token, makes up $529 million of the assets being liquidated. FTT’s limited liquidity and market depth raise questions about FTX’s liquidation strategy for these tokens.
FTX’s portfolio also includes a significant portion of other cryptocurrencies such as Aptos, Dogecoin, Polygon’s MATIC, XRP.
FTX steps up recovery measures
FTX continues to make a series of legal maneuvers to recover assets amid its financial troubles.
Recently, the exchange filed a clawback lawsuit against LayerZero, an omnichain interoperability platform, hoping to recover $21 million. Additionally, it has begun legal action against LayerZero’s chief operating officer Ari Litton, who is seeking $13 million in damages and $6.5 million from Skip & Goose, a company owned by Litton.
Additionally, FTX is reportedly reconsidering the endorsement fees paid to sports personalities like Naomi Osaka and Shaquille O’Neal. During its heyday, the now-bankrupt exchange spent huge sums on celebrities for marketing drives.
For example, Osaka earned $3.2 million for its association with and support of FTX.
Disclaimer
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Source: beincrypto.com
