Following a court motion to appoint a liquidator with a discretionary $100 million per week sales mandate, a tweet from the official FTX Twitter account has raised alarm among some traders.
On Wednesday, the rarely-used official FTX account tweeted that the organization “has been actively bridging tokens” from various blockchains to their native chains, perhaps in an effort to cut back on vulnerabilities related to bridge hacks. Additionally, the tweet mentioned consolidating assets with custodian Bitgo.
FTX has been actively bridging tokens from various blockchains back to their native blockchains. FTX also has been in the process of migrating SOL and other tokens from existing wallets to BitGo, FTX’s qualified custodian.
— FTX (@FTX_Official) September 6, 2023
Armchair analysts have long criticized the organization for inefficiently managing the company’s remaining assets and customer deposits following the November 2022 collapse, with at times amateurish interactions with DeFi protocols ultimately leading to losses totaling in the millions of dollars.
On-chain analysis shows that over the past week, known FTX addresses have indeed bridged a number of assets back to their native chains. According to analysis from Cielo Finance founder Matt Aaron, FTX bridged $1.7 million in UNI from Solana to Ethereum. Additionally, Blockworks analysis of data from Arkham shows that FTX addresses also bridged over $12 million in ETH, as well as smaller sums of assets such as YFI, SUSHI and HXRO.
Blockworks could not identify any transfers to Bitgo. Per the terms of their initial engagement, Bitgo is being paid a $5 million retainer and $100,000 per month as FTX’s qualified custodian.
Despite the relatively mundane messaging and data, the tweet nonetheless sparked anxiety among some traders.
CMS Holdings Dan Matuszewski tweeted a GIF of a meteor hitting the earth in response to FTX’s original statement. Popular Pseudonymous trader Hsaka tweeted an image from the famous ‘fire sale’ scene from 2011’s “Margin Call.” Another trader simply wrote, “**** I wanna get drunk.”
https://t.co/maVj6QOaLx pic.twitter.com/2ahafALxTY
— The CMS (@cmsholdings) September 6, 2023
Part of the skittishness can be sourced to recent court proceedings in which lawyers for FTX asked a court to authorize an agreement which would enable crypto management firm Galaxy to liquidate significant sums of the company’s assets.
The agreement would enable Galaxy to sell up to $100 million per week, with the option of increasing the cap to $200 million per week. Galaxy would also be tasked with hedging against BTC and ETH price in an effort to “lessen the Debtors’ exposure to adverse price movements in Bitcoin and Ether prior to their sale.”
There is as of yet no apparent on-chain evidence that any sales have begun at scale.
