The bankruptcy restructuring team of the bankrupt cryptocurrency exchange FTX is currently selling its locked 41 million SOL tokens at a discounted price, generating significant interest from institutional buyers. What does this mean for the future price of Solana? And how long is the lock-up period for these institutional buyers?
Last weekend, Dynamic Zone reported that the FTX liquidation team chose Galaxy Asset Management to assist in selling its locked 41 million SOL tokens in September 2023. Neptune Digital was the first company to publicly announce its acquisition of SOL, purchasing 26,964 SOL tokens at a price of $64 per token.
Based on the SOL price of $188 at the time of the news exposure, the discount of $64 represents a significant 66% discount, meaning that immediate selling could result in a profit of over 290%. However, to avoid immediately impacting the market, both parties agreed to a lock-up arrangement.
Note: In mid-September last year, the U.S. bankruptcy court ruled that FTX could sell up to $200 million worth of cryptocurrencies per week with the assistance of Galaxy, or use the pledged assets to hedge its cryptocurrency holdings to repay its creditors.
FTX continues to sell SOL, causing the price to decline
According to the latest report from Bloomberg, nearly two-thirds of the 41 million SOL tokens have been sold, raising approximately $1.9 billion in liquidity for FTX. The funds participating in the bidding for SOL include Galaxy Trading, which is one of the funds that raised funds from investors to bid for locked SOL tokens at a price of $64 per token. The fund will charge a 1% management fee. BitGo is the token custodian for SOL.
Earlier this month, Pantera also raised funds from investors to establish a fund to purchase locked SOL tokens worth $250 million. Pantera plans to charge a 0.75% management fee and a 10% performance fee.
However, whether influenced by this news or dissatisfaction with the increasing control of Solana by institutions, the price of SOL has continued to fluctuate and decline this week, reaching a low of $167.84 last night, the lowest in nearly two weeks.
What is the lock-up period?
As for the question that many investors are concerned about, when will the SOL tokens purchased by institutions at a discounted price 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, these institutions will not be able to sell the tokens in their hands for nearly a year, and complete unlocking will have to wait for four years. However, since their entry costs are very low, they will have to decide whether to exit for profit or continue to wait for higher prices. This is still subject to ongoing observation.