FTX Stakes Tokens
On Monday, the bankruptcy estate for now-fallen crypto exchange FTX staked SOL tokens worth over $122 million. On-chain observers have reported that the tokens were transferred from an FTX-owned crypto wallet to Figment, the staking platform that caters to institutional crypto investors.
Over the weekend, FTX estate also staked over 3,000 ETH, estimated to be $5 million. According to on-chain analytics platform Nansen, these tokens were transferred from a crypto wallet owned by FTX’s sister company, Alameda Research.
For starters, staking in crypto means locking up your assets for a predefined period to receive rewards. It only applies to proof-of-stake tokens like Solana and Ethereum.
Why Did FTX Stake Crypto Assets Instead of Selling Them to Make Users Whole?
In August, FTX CEO John j Ray III announced that the crypto exchange had moved to court to seek approval for selling the firm’s crypto assets that were mentioned in its bankruptcy proceedings. FTX saw their request approved the following month. The exchange tasked Galaxy Digital to oversee the sale of its cryptocurrencies, worth over $3.4 billion. Among the digital currencies approved for sale included Solana, Ethereum, and Bitcoin.
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It is worth pointing out that FTX’s August court filing included the option to stake certain crypto assets in order to generate passive income. The bankruptcy estate move to stake ETH and SOL indicates that the option has now been executed.
FTX founder and CEO Sam Bankman-Fried was a huge proponent of the Solana ecosystem. Last year, he revealed his fallen company had invested in Solana Labs, the developer behind the Solana blockchain. Moreover, Bankman-Fried bought over 50 million SOL tokens from the Solana Foundation in August 2020, most of which were locked. At the time, the Foundation said it would unlock a certain amount of the locked tokens monthly until 2028.
When testifying against Bankman-Fried last week in an ongoing trial, ex-CEO of Alameda Research, Caroline Ellison, told the court that Solana was like the FTX founder’s project, considering the many times he promoted it.
Notably, SOL remains to be the largest holding in FTX’s crypto wallets. After staking some of the tokens yesterday, the exchange now holds $1.03 billion worth of SOL.
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