Bankrupt cryptocurrency exchange FTX’s liquidation team is currently selling its locked-up 41 million SOL tokens at a discounted price, generating significant interest from institutional buyers. Is this good or bad for the future price of Solana? How long is the lock-up period for institutional investors?
Last weekend, it was reported that FTX’s liquidation team chose Galaxy Asset Management to assist in selling its locked-up 41 million SOL tokens in September 2023. Neptune Digital was the first company to publicly announce its acquisition of SOL tokens, purchasing 26,964 SOL tokens at a price of $64 per token.
Based on the SOL price at the time of the news exposure, which was $188, the discount of $64 represents a 66% discount, meaning an immediate profit of over 290% if sold immediately. However, to avoid immediate market impact, both parties have agreed to a lock-up period.
Note: In mid-September last year, the U.S. bankruptcy court ruled that FTX could sell up to $200 million worth of cryptocurrency assets per week through Galaxy or use its held cryptocurrency as collateral to repay creditors.
FTX continues to sell SOL, causing the price to decline
According to the latest report from Bloomberg, approximately two-thirds of the 41 million SOL tokens have already been sold, raising approximately $1.9 billion in liquidity for FTX. The funds participating in the bidding for SOL tokens include Galaxy Trading, which is one of the funds that raised capital from investors to bid for locked-up SOL tokens at $64 per token, with a 1% management fee. BitGo is the custodian for the SOL tokens.
Earlier this month, Pantera also raised funds from investors to establish a fund to purchase locked-up SOL tokens worth $250 million. Pantera plans to charge a 0.75% management fee and a 10% performance fee.
However, whether due to the impact of this news or dissatisfaction with the increasing level of institutional control over Solana, the price of SOL has been continuously fluctuating and declining this week, reaching a low of $167.84 last night, the lowest in nearly two weeks.
Lock-up period
As for when the SOL tokens purchased at a discounted price by institutions will be unlocked, Neptune Digital, which purchased 26,964 SOL tokens, stated that 20% of the tokens will be unlocked in March 2025, and the remaining tokens will be linearly unlocked monthly until 2028.
In other words, for nearly a year, these institutions will not be able to sell the tokens in their possession, and it will take four years for full unlock. However, due to their low entry cost, it remains to be seen whether they will choose to exit for profit or continue to wait for higher prices to be realized.
Related Reports
Why does anti-crypto senator Elizabeth Warren dislike crypto so much? Musk: SBF’s father is her advisor…narrow-minded revenge?
SBF: I’m not a super villain! US government seeks 50-year sentence to lock me up until death
SBF argues “No user losses” should not result in severe punishment! FTX’s current CEO angrily rebuts: When I took over, there were only 105 bitcoins left.