Wallets associated with bankrupt crypto firms Alameda Research and FTX have made significant movements of cryptocurrency, transferring more than $10 million to a single wallet address. These funds were then deposited into exchange deposit accounts.
Huge Transfers Spark Speculation
Data from Spot On Chain revealed that within a span of five hours, from October 24 to October 25, a bankrupt firm sent $10 million worth of crypto to a single wallet address. The funds were then deposited into popular exchanges Coinbase, Binance, and Wintermute, triggering speculation about a potential asset selloff as part of the bankruptcy proceedings.
Reasons Behind the Asset Selloff
The bankrupt company is preparing to liquidate some of its assets in order to repay creditors. This move was prompted by the criminal trial of FTX founder Sam Bankman-Fried in a U.S. court. As part of this process, three addresses associated with FTX and Alameda, which is owned by FTX, moved $10 million worth of digital assets from the Solana network to Ethereum.
“These transfers came from three addresses associated with FTX and Alameda, which is also owned by FTX, moving $10 million worth of digital assets from the Solana network to Ethereum,” Spot On Chain data revealed.
According to Spot on Chain data, one address believed to belong to FTX transferred 2,904 Ether (ETH), worth over $5.14 million at that time, to the central address on October 24. Shortly after, the address sent 1,000 ETH to a Coinbase address and 1,904 ETH to a Binance deposit address on Wintermute, marking the first batch of transactions.
Later, a wallet linked to Alameda Research sent $3.16 million worth of tokens, including 198,807 Chainlink (LINK) and 11,974 Aave (AAVE), to the same address. In the early hours of October 25, an FTX cold wallet moved 1,341 Maker (MKR) worth $2.09 million to the same address. Within the next five hours, FTX and Alameda wallets sent an additional $5 million worth of cryptocurrency to this address, including COMP. In total, $10,362,403 worth of cryptocurrency was sent to exchange deposit addresses during this period, according to Spot on Chain data.
FTX’s Regulatory Challenges and Liquidation Plans
The now-defunct FTX exchange, previously led by Sam Bankman-Fried, has faced regulatory challenges and a questionable reputation since its collapse. In 2022, FTX proposed a plan to appoint Galaxy Digital Capital Management as the investment manager responsible for handling the sale and management of its recovered crypto holdings. In a hearing in April of the same year, it was disclosed that FTX had recovered approximately $7.3 billion in liquid assets, with $4.8 billion of that recovered by November 2022. FTX held a total of $4.3 billion in crypto assets available for stakeholder recovery at market prices as of April 12.
In September, a Delaware Bankruptcy Court approved a plan to liquidate $3.4 billion worth of crypto assets held by FTX and Alameda Research. The announcement raised concerns about potential market downturns due to the significant amount of cryptocurrency being sold. However, experts have noted that the liquidation will be done gradually and in phases to mitigate its impact on the market.
These recent transfers are part of a series of fund movements conducted by FTX wallets since the company filed for bankruptcy. In early October, the group staked over $150 million worth of Ether (ETH) and Solana’s SOL tokens, potentially earning yields of up to 8% on these holdings. These transactions coincide with the 12th day of Sam Bankman-Fried’s trial, which centers around fraud-related charges in a Manhattan federal court. The trial has unveiled several revelations, particularly from testimonies given by Bankman-Fried’s former associates, including Caroline Ellison, the former CEO of Alameda.
