Wallets associated with the bankrupt cryptocurrency exchange FTX and its affiliated trading firm, Alameda Research, have unstaked a significant amount of Solana (SOL) tokens. This move marks the largest single unstaking event since the companies began liquidating assets in late 2023.
On March 4th, blockchain analytics firm Lookonchain reported that these wallets unstaked 3.03 million SOL. At the time of the transaction, these tokens were valued at approximately $431 million. Following the unstaking process, which typically takes several days to complete, the entities began transferring portions of the now-liquid SOL to major cryptocurrency exchanges.
Shortly after the tokens were unlocked, the wallets deposited around 25,000 SOL, worth roughly $3.3 million, to the Binance exchange. This action is consistent with their previous behavior of gradually moving unlocked assets to trading platforms for sale.
This recent unstaking event is the largest conducted by FTX and Alameda since November 2023. At that time, the companies unstaked 2.1 million SOL, valued at $141 million. Since then, they have been consistently unstaking and liquidating millions of dollars worth of SOL tokens as part of their ongoing bankruptcy proceedings.
Understanding the Court-Ordered Asset Liquidation Process
Despite unlocking over $400 million in Solana tokens, FTX and Alameda cannot liquidate all these assets in a single transaction. The liquidation process is governed by strict rules set forth by the Delaware Bankruptcy Court.
In September 2023, the court approved FTX's plan to sell its digital assets but imposed weekly limits on the liquidation amounts. Initially, the bankrupt exchange was permitted to sell up to $50 million in digital assets during the first week through an investment advisor. For subsequent weeks, the limit was set at $100 million per week.
If FTX wishes to sell more than these stipulated amounts, it must seek special permission from the court to increase the weekly limit to a maximum of $200 million. This structured approach is designed to prevent massive sell-offs that could negatively impact the markets for these digital assets.
Tracking FTX's Solana Liquidation Activities
Data from blockchain analytics platform Spot On Chain reveals the scale of FTX's Solana unstaking and selling activities since November 2023. According to their analysis, FTX and Alameda have unstaked a total of 7.83 million SOL tokens during this period.
The companies have reportedly sold approximately $986 million worth of these tokens at an average price of $125.80 per SOL. These sales were conducted primarily through two major exchanges: Coinbase and Binance. The gradual, measured approach to selling appears designed to maximize returns while minimizing market disruption.
This careful liquidation strategy is particularly important for Solana, which has shown significant price volatility in recent months. By spacing out their sales, FTX's estate administrators likely hope to avoid triggering sharp price declines that would reduce the overall value recovered for creditors.
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FTX's $1.2 Billion Customer Repayment Initiative
The unstaking and liquidation of SOL tokens coincides with FTX's efforts to repay customers who lost funds when the exchange collapsed in November 2022. In mid-February, FTX began distributing approximately $1.2 billion in digital assets to affected users.
This repayment process represents a significant milestone in the crypto industry's recovery from one of its most high-profile failures. However, the distribution has faced several challenges, particularly regarding eligibility across different jurisdictions.
On February 21st, FTX creditor and advocate Sunil Kavuri shared a list of 163 jurisdictions whose residents are currently ineligible to receive repayments directly from FTX. This creates complications for many claimants from these regions, though Kavuri noted that the exchange is working on potential solutions for affected users.
The repayment process involves complex valuation calculations to determine appropriate compensation amounts. Since customers held various cryptocurrencies on the platform, the estate must convert these claims into dollar values based on prices from specific dates, adding another layer of complexity to the distributions.
The Impact on Solana's Market Performance
Large unstaking events and subsequent sales by major holders like FTX can create downward pressure on cryptocurrency prices. However, the market has largely anticipated these sales since the bankruptcy court approved the liquidation plan last year.
The structured, limited weekly sales have helped prevent dramatic price impacts that might have occurred if all assets were dumped on the market simultaneously. This approach benefits both FTX's creditors (who recover more value) and the broader Solana ecosystem (which experiences less selling pressure).
Market analysts continue to monitor FTX's wallet activities closely, as future unstaking and selling actions could provide signals about market direction. The gradual nature of these sales has allowed the market to absorb them without major disruptions to SOL's price trajectory.
Frequently Asked Questions
Why did FTX and Alameda unstake so much Solana at once?
The unstaking process is part of FTX's court-approved asset liquidation plan to convert locked tokens into liquid assets that can be sold to repay creditors. Large unstaking events typically precede planned sales of these assets through approved channels.
How does the court prevent FTX from dumping all their tokens at once?
The Delaware Bankruptcy Court has established weekly selling limits of $50-100 million, with possibilities to increase to $200 million with special permission. This prevents market manipulation and minimizes price impact from large sales.
Can FTX customers expect to be fully repaid?
While FTX has begun distributing approximately $1.2 billion to customers, the full repayment percentage will depend on continued successful asset liquidation and overall estate valuation. Some customers may not receive full compensation for their losses.
What happens to SOL tokens that remain unstaked but unsold?
Unsold tokens typically remain in FTX's wallets until they are gradually sold according to the court-approved schedule. The estate managers likely employ treasury management strategies to optimize sale timing relative to market conditions.
How does staking and unstaking work in the Solana network?
Solana uses a proof-of-stake consensus mechanism where token holders can "stake" their SOL to help secure the network and earn rewards. Unstaking typically involves a deactivation period before tokens become liquid and transferable.
Are there any restrictions on which countries can receive FTX repayments?
Yes, FTX has identified 163 jurisdictions whose residents are currently ineligible for direct repayments due to regulatory complexities. The estate is reportedly working on alternative solutions for affected claimants.
The ongoing liquidation process represents a careful balancing act between maximizing creditor recovery and minimizing market disruption. As FTX continues to unwind its positions, market participants will be watching closely for signals about how these large-scale asset sales might influence cryptocurrency prices in the coming months.