FTX And Alameda Ramp Up Liquidations; Almost $100 Million In Assets Sold In Just One Month

Managers of the collapsed crypto exchange FTX and its sister trading firm Alameda have undertaken substantial liquidations, selling off assets totaling over $100 million in just one month. This move follows FTX’s proposal for a compensation plan aimed at resolving disputes with creditors in the wake of the firms’ collapse in 2022.

According to data from Arkham Intelligence, tagged FTX and Alameda wallets have dispatched a combined $97.35 million for liquidation over the past month. However, despite these liquidations, FTX retains significant holdings, including $33.85 million in BOBA and $11.22 million in ETH. On the other hand, Alameda holds $140 million of WLD, $102 million of BIT, $93 million of BTC, and $48 million of STG.

The timing of these liquidations is noteworthy, occurring shortly after FTX legal representative law firm Sullivan & Cromwell (S&C) unveiled its compensation plan on May 7, promising creditors “approximately 118% of the amount of their allowed claims within 60 days” of court approval. The plan, which aims to expedite the resolution process without prolonged litigation, estimates the total compensation cost to range between $14.5 billion to $16.3 billion.

FTX’s ability to fund this compensation stems from the sale of a diverse array of cryptocurrencies, largely comprising investments made by Alameda and FTX Ventures. However, recent auctions, such as the below-market sale of Solana in late April, have stirred controversy. As ZyCrypto reported, FTX sold 1.9 million SOL at a significant discount recently, sparking outrage among creditors who felt shortchanged.

On Friday, May 10, Sunil Kavuri, a spokesperson for FTX’s largest creditor group, voiced opposition to the proposed recovery plan. The pundit highlighted discrepancies in payment methods and asset valuation, fueling discontent among creditors. Kavuri asserted that losses could total around $10 billion, exacerbated by the valuation of assets at the time of bankruptcy declaration.

The plan’s critics also point fingers at S&C, accusing the law firm of facilitating FTX Group’s alleged fraud. A lawsuit filed by a group of creditors accuses S&C of complicity in FTX’s misconduct, underscoring the contentious nature of the proposed compensation plan.

“Should Vote NO to the plan S&C. Debtors owe FTX customers current value of their holdings (3x to 10x petition prices) S&C has destroyed an est. $10bn value for FTX creditors SBF was sentenced to 25 years for breaking TOS and stealing customer deposits S&C is a defendant in our class action lawsuits for aiding/abetting SBF’s fraud,” wrote Kavuri.

Elsewhere, BitGo CEO Mike Belshe predicted widespread dissatisfaction among FTX’s creditors with the proposed plan. With the voting scheduled for June, the fate of the compensation plan hangs in the balance amid lingering uncertainties and grievances within the crypto community.