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FTX’s bankruptcy administrators have sold roughly two-thirds of a $2.6 billion hoard of Solana tokens in a deeply discounted deal that drew industry heavyweights from Galaxy Trading to Pantera Capital, people with knowledge of the matter said.
The FTX estate sold between 25 million and 30 million locked-up SOL coins at $64 apiece, the people said, declining to be identified discussing confidential terms. That would have raised as much as $1.9 billion for the estate. SOL was trading at around $172 on Friday, down 6.5%.
The deal, stemming from FTX’s messy unraveling in November 2022, is unprecedented in scale and scope in the crypto industry. For the buyers, it means the potential for a massive windfall if SOL remains close to current levels “- but also taking a significant risk on a volatile token that sank as much as 97% in the last bear market.
“Basically you’re exchanging time for a discount “- you have to lock up your capital for four years, but you get to pay much less for the tokens,” said Eva Weng, head of investments at Caladan, a crypto market maker. Caladan wasn’t involved in the SOL transactions.
FTX paused the SOL sale process in early March due to “significant buyer interest,” according to an email sent to a prospective investor and seen by Bloomberg. The estate declined to comment on how many tokens it’s sold and at what price. It isn’t clear when sales will resume.
Galaxy Trading, a unit in Mike Novogratz’s Galaxy Digital, raised about $620 million for a fund set up to buy SOL from the FTX estate, according to a person familiar with the matter. Galaxy Trading will charge investors in the vehicle a 1% management fee, the person said, asking not to be named discussing confidential terms. It will offer investors a yield through a process known as staking.
FTX in August tapped Galaxy Asset Management, another Galaxy Digital unit, to help oversee divestments of the vast pile of cryptocurrencies it holds. A spokesperson for Galaxy Digital declined to comment.
The 41 million SOL tokens the FTX estate is selling are locked according to a pre-agreed vesting period, meaning they’re not available to trade in the market. They’ll become available for sale gradually over four years.
FTX’s co-founder, the convicted fraudster Sam Bankman-Fried, was a major backer of SOL. The token, which runs on the Solana blockchain, formed the biggest part of the trove of digital assets stuck on the exchange when it collapsed, an episode that sent shock waves through crypto markets. Bankman-Fried was sentenced to 25 years in prison in late March.
Pantera, Neptune deals
As Bankman-Fried awaited his sentencing, the SOL selldown was attracting some of crypto’s biggest names. Pantera, the $5.2 billion asset manager, was raising money for a fund set up to buy up to $250 million of SOL from the FTX estate, Bloomberg News reported in early March.
Vancouver-based Neptune Digital Assets Corp. announced on March 27 that it bought 26,964 SOL for $1.7 million.
FTX creditors, meanwhile, have alleged they were shortchanged in the SOL sale process. The judge overseeing the insolvency case ruled in January that the size of each claim should be set based on what the customer or creditor was owed on the day FTX filed for bankruptcy. SOL traded at around $16 that day, less than a tenth of its current market price.
As the price of SOL rallied in past months, that gap became a sticking point for some creditors. Sunil Kavuri, an FTX creditor who spoke in court during Bankman-Fried’s final sentencing hearing, said the SOL coins are “our property.” Another creditor who provided a written statement for the hearing said of the SOL sale that the FTX estate is “giving away money for free to hedge funds.” The person’s name was redacted in court papers.
A spokesperson for the FTX estate said its primary goal “is to minimize risk and maximize value for creditors by returning as much cash as possible,” adding that it is taking “taking strategic, decisive and timely action to liquidate assets” as it moves towards distributing money to customers of the failed platform.
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