FTX’s $3.4B crypto liquidation: What it means for crypto markets
The FTX bankruptcy lawsuit reached a key juncture in the second week of September after the United States Bankruptcy Court for the District of Delaware approved the sale of $3.4 billion worth of crypto assets.
The court also approved $1.3 billion in brokerage and government-recovered assets as part of the liquidation process, with $2.6 billion in cash bringing the total tally to $7.1 billion in liquid assets.
Among the different cryptocurrencies set for liquidation, Solana (SOL) tops the pile with a value of $1.16 billion, and Bitcoin (BTC) is the second-largest asset held, valued at $560 million.
Other assets to be liquidated include $192 million in Ether (ETH), $137 million in Aptos (APT), $120 million in Tether (USDT), $119 million in XRP (XRP), $49 million in Biconomy Exchange Token (BIT), $46 million in Stargate Finance (STG), $41 million in Wrapped Bitcoin (WBTC) and $37 million in Wrapped Ethereum (WETH).
Bitcoin, Ether and insider-affiliated tokens can only be sold after giving a 10 days advance notice to U.S. trustees appointed by the Department of Justice. The court also permitted hedging options for these assets.
The allowance for hedging is significant because FTX can use various financial instruments, such as futures, options and perpetual swaps to offset the losses.
The ruling drew industry-wide attention due to the significant amount of crypto assets approved for sale, with many questioning the potential impact on the crypto market.
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Joshua Garcia, partner at Web3-focused legal firm Ketsal, told Cointelegraph that determining whether the liquidation was the right decision is challenging. He said that bankruptcy courts have to focus on what is good for creditors, and creditors may care more about the recovery of funds rather than a potential slump in the price of the assets being liquidated.
“Whether or not this decision impacts the token price is perhaps not the court’s primary concern. The potential or imagined market impact may mean nothing to a judge or creditors committee if it doesn’t make creditors whole, at least in the eyes of the court. The concern here is millions of users suffered substantial losses due to FTX’s actions. Making victims as whole as possible is the top priority.”
The discovery of billions of dollars of liquid assets also relieved many creditors in the case.
Blake Harris, an asset protection attorney, believes unearthing liquid assets can be a game-changer in the FTX bankruptcy case. He told Cointelegraph that the newfound liquid assets “could offer more flexibility in asset management, allowing for a strategic approach that balances immediate legal requirements with broader market implications,” adding that “the discovery of such assets could provide some relief in terms of meeting immediate financial obligations, but it’s also essential to consider how these assets will be managed moving forward to prevent similar situations in the future.”
Market analysts predicted that Solana and Aptos prices have the highest chance of facing price volatility after liquidation based on each token’s daily trading volume.
How much of an impact will FTX’s liquidation have on the market?#SOL (81%) and #APT (74%) will have the most impact when you look at the daily trading volume of each token#BTC, #XRP, and #BNB liquidations will have very little impact on the market as each are 1% or less of… pic.twitter.com/XXIoZbKfBm
— Velvet.Capital (@Velvet_Capital) September 17, 2023
FTX liquidation won’t risk a crypto market cascade
The bankruptcy court has taken measures to ensure that the liquidation of FTX assets won’t become a burden for the crypto market.
The court order permits FTX to sell digital assets through an investment adviser in weekly batches in accordance with pre-established rules. Galaxy Digital has been entrusted with liquidating the assets and maximizing returns for FTX’s creditors while ensuring market stability.
The court also permitted FTX “to utilize staking options available through their qualified custodians using their respective private validators if the Debtors determine in the reasonable exercise of their business judgment that such activities are in the best interests of their estates.”
In the first week, there will be a $50 million cap on the sale of assets, followed by a $100 million cap in the succeeding weeks. The cap can be increased up to $200 million per week with the previous written consent of the creditors’ committee and ad hoc committee after court approval.
Anthony Panebianco, a commercial business litigator, told Cointelegraph that legally, a court may permit a debtor to liquidate its assets “outside the normal scope of business” in order to maximize the value from the sale to repay creditors, adding:
“The interesting part is that the court took an additional step to look at the general marketplace for the assets it is granting liquidation of. That is, the court is looking at protecting both creditors and non-creditors of FTX by the manner in which it has ordered the liquidation process.”
He also highlighted the different liquidation strategies for BTC and ETH. He said the “court-approved hedging arrangements for Bitcoin and Ether are subject to certain investment guidelines,” adding that “the court did not include Solana in these eligible assets for hedging arrangements, likely because of FTX’s large position in Solana. All three appear to be eligible for staking arrangements, again with oversight.”
Among all crypto assets held by FTX slated for liquidation, Solana became a major point of discussion owing to the $1.1 billion of the asset on the bankrupt crypto exchange’s balance sheet. According to market analysts, people considering a short position should be wary of the unlock period of the tokens held by FTX, with a complete unlock in 2028.
Looking at FTX’s SOL staking unlock schedule, a significant chunk of these tokens will slowly make their way to the market via linear vesting or scheduled unlocks until 2028, with the largest unlock scheduled for March 2025. Most of the SOL is locked in staking contracts.
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The linear vesting program offers a simple mechanism to gradually release a token balance over certain periods.
Currently, only 24% of the total $1.16 billion SOL tokens have been unlocked. Apart from Solana, Aptos tokens are also 100% locked and will be unlocked in phases over the next few years.
In its own analysis, Coinbase crypto exchange said that the scheduled and phased liquidation will keep the market stable, noting the strict controls in place for selling certain “insider-affiliated” tokens and a major part of FTX’s SOL holdings locked up until around 2025 due to the token’s vesting schedule.
While many experts state that markets are more or less safe amid the FTX liquidation, the exchange’s saga is far from over, with former CEO Sam Bankman-Fried’s legal team sparring with prosecutors for special conditions ahead of the trial.
Moreover, the exchange’s alleged illegal behavior has dealt a significant blow to public trust in the crypto ecosystem.
Over $4 trillion worth of real estate could be tokenized on blockchain networks during the next decade, potentially offering investors greater access to property ownership opportunities, according to a new report.
The Deloitte Center for Financial Services predicts that over $4 trillion worth of real estate may be tokenized by 2035, up from less than $300 billion in 2024. The report, published April 24, estimates a compound annual growth rate (CAGR) of more than 27%.
The $4 trillion of tokenized property is predicted to stem from the benefits of blockchain-based assets, as well as a structural shift across real estate and property ownership.
“Real estate itself is undergoing transformation. Post-pandemic work-from-home trends, climate risk, and digitization have reshaped property fundamentals,” according to Chris Yin, co-founder of Plume Network, a blockchain built for real-world assets (RWAs).
“Office buildings are being repurposed into AI data centers, logistics hubs and energy-efficient residential communities,” Yin told Cointelegraph.
“Investors want targeted access to these modern use cases, and tokenization enables programmable, customizable exposure to such evolving asset profiles,” he said.
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The uncertainty triggered by US President Donald Trump’s import tariffs has boosted investor interest in the RWA tokenization sector, which involves minting financial products and tangible assets on a blockchain.
Both stablecoins and RWAs have attracted significant capital as safe-haven assets amid the global trade concerns, Juan Pellicer, senior research analyst at IntoTheBlock, told Cointelegraph.
The tariff concerns also led tokenized gold volume to surpass $1 billion in trading volume on April 10, its highest level since March 2023 when a US banking crisis saw the sudden collapse of Silicon Valley Bank and the voluntary liquidation of Silvergate Bank
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Blockchain innovation could drive regulatory clarity
Growing RWA adoption may inspire a more welcoming stance from global regulators, Yin said.
“While regulation is a hurdle, regulation follows usage,” he explained, likening tokenization to Uber’s growth before widespread regulatory acceptance:
“Tokenization is similar — as demand increases, regulatory clarity will follow.”
He added that making tokenized products compliant with a wide range of international regulations is key to unlocking broader market access.
However, some industry watchers are skeptical about the benefits introduced by tokenized real estate.
“I don’t think tokenization should have its eyes directly set on real estate,” said Securitize chief operating officer Michael Sonnenshein at Paris Blockchain Week 2025.
“I’m sure there are all kinds of efficiencies that can be unlocked using blockchain technology to eliminate middlemen, escrow, and all kinds of things in real estate. But I think today, what the onchain economy is demanding are more liquid assets,” he added.
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United States Senator Cynthia Lummis suggests the crypto industry may be celebrating too soon over the US Federal Reserve softening its crypto guidance for banks.
“The Fed withdrawing crypto guidance is just noise, not real progress,” Lummis said in an April 25 X post. Lummis called the Fed’s April 24 announcement — withdrawing its 2022 supervisory letter that had discouraged banks from engaging with crypto and stablecoin activities — “just lip service.”
Lummis’ tone was different from the rest of the crypto industry
Lummis, a pro-crypto advocate known for introducing the Bitcoin (BTC) Strategic Reserve Bill in July 2024, pointed out several flaws in the Fed’s announcement, even as Strategy founder Michael Saylor and crypto entrepreneur Anthony Pompliano suggested it was a step forward for banks and crypto.
She argued that the Fed continues to “illegally flout the law on master accounts” and still relies on reputational risk in its bank supervision practices. It comes as the Federal Insurance Deposit Corporation (FDIC) is working on a rule to stop examiners from considering reputational risk when reviewing a bank’s operations, according to a recent Bloomberg report.
Lummis also highlighted the Fed’s policy statement in Section 9(13), which hasn’t been withdrawn, stating that Bitcoin and digital assets are considered “unsafe and unsound.”
She also reiterated many of the same staff behind Operation Chokepoint 2.0 are still involved in crypto policy today.
“We are NOT fooled. The Fed assassinated companies within the industry and hurt American interests by stifling innovation and shuttering businesses. This fight is far from over.”
“I will continue to hold the Fed accountable until the digital asset industry gets more than a life jacket, Chair Powell — they need a fair shake,” Lummis said.
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Custodia Bank founder and CEO Caitlin Long seemed to share a similar view to Lummis.
“THANK YOU for seeing this for what it is,” Long said.
However, many crypto executives praised the Fed’s announcement as a positive development for the industry. Saylor said in an April 25 X post that the Fed’s move means that “banks are now free to begin supporting Bitcoin.”
Anastasija Plotnikova, co-founder and CEO of blockchain regulatory firm Fideum, said the Fed’s decision “is a significant development, as it will simplify the path to institutional adoption.”
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In one of his first appearances as the recently sworn-in chair of the US Securities and Exchange Commission, Paul Atkins delivered remarks to the agency’s third roundtable discussion of crypto regulation.
In the “Know Your Custodian” roundtable event on April 25, Atkins said he expected “huge benefits” from blockchain technology through efficiency, risk mitigation, transparency, and cutting costs. He reiterated that among his goals at the SEC would be to facilitate “clear regulatory rules of the road” for digital assets, hinting that the agency under former chair Gary Gensler had contributed to market and regulatory uncertainty.
“I look forward to engaging with market participants and working with colleagues in President Trump’s administration and Congress to establish a rational fit-for-purpose framework for crypto assets,” said Atkins.
Some critics of US President Donald Trump see Atkins’ nomination to lead the SEC as a nod to the crypto industry, acting on campaign promises to remove Gensler — the former chair resigned the day Trump took office — and cut back on regulation. Democratic lawmakers on the Senate Banking Committee questioned Atkins on his ties to the industry, potentially presenting conflicts of interest in his role regulating crypto.
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“We’ve noticed that we don’t have to be as concerned […] about being accused of things that we’re not doing, like being broker-dealers for securities,” Exodus chief legal officer Veronica McGregor, who participated in the roundtable, told Cointelegraph on April 24.”It’s just a less scary regulatory environment in general. It is, however, still unclear what the ultimate regs are going to look like for crypto.”
The SEC crypto task force is scheduled to hold two more roundtables in May and June to discuss tokenization and decentralized finance, respectively. Commissioner Hester Peirce, who leads the task force, told Cointelegraph in March that she welcomed the opportunity to work with Atkins to “reorient the agency,” hinting at an SEC with regulations more favorable to the crypto industry.
In addition to the roundtables, the crypto task force has reported several meetings with digital asset firms to discuss various policies and considerations in developing a regulatory framework.
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