FTX, a cryptocurrency broker that filed for bankruptcy in November 2022, may be behind a billion-dollar sale of Bitcoin. The assets are said to be in GBTC, a Grayscale fund that recently converted into an ETF.
In short, FTX is said to have 22 million GBTC shares and according to private data from CoinDesk, the bankrupt brokerage has sold off its assets. Since each share is valued at ~0.00089 BTC, this would represent approximately 19,650 bitcoins or R$4 billion at the current price.
Another reason to believe that FTX has already sold its GBTCs was the withdrawal of a lawsuit by Alameda Research, also founded by Sam Bankman-Fried, against Grayscale. The filing took place last Friday (19) and was also reported by CoinDesk.
FTX is among those responsible for the selling pressure on Bitcoin
Before GBTC was converted into an ETF, the fund was effectively a prison because, within other constraints, it was impossible to redeem its investments in cash.
This explains why the fund started operating at a discount to the market. However, since GBTC had bitcoins as its backing, some traders started buying it, thinking that the price would balance out in the future.
The problem is that this discount has only increased. From 5% it went to 10% and then to 50%. With the conversion to ETF, GBTC lost all this discount, but it was too late. Giants like Three Arrows Capital who bought GBTC with BTC went bankrupt before they saw this happen.
FTX was another company that took a risk with this strategy. However, the broker’s situation is even worse because he used the money to place this bet. According to data from CoinDesk, FTX held almost 20,000 bitcoins (R$4 billion) in GBTC.
In its early days, Grayscale’s ETF saw outflows of $2.8 billion. Therefore, approximately 30%, or $800 billion, should be tied to FTX. More bitcoins may be linked to other companies that went bankrupt during the past cryptocurrency winter.
News can make FTX customers happy
While this multi-billion dollar sale of bitcoins by FTX put pressure on the market, the news could come as a relief to former FTX clients who have money in the brokerage. After all, the R$4 billion in BTC can help you pay your debts to creditors.
In October 2023, the new management of the brokerage announced that it would be willing to pay its clients, but the amount would only be 90%. Therefore, this amount can cover the missing 10%, if it was not in the bill.
FTX’s cryptocurrency, FTT, rose from US$2.64 to US$2.95 on the news this afternoon. Shortly afterwards, however, it fell again.
Finally, all indications are that these are the only negative effects of ETFs on the market and that the market will be ready to move on from there.
Source: Live Coins
Barry Siefert is an accomplished journalist and author at The Nation View. He is known for his expertise in the field of cryptocurrency, and has written extensively on the topic. With a background in finance and economics, Barry has a deep understanding of the underlying technology and market forces that drive the crypto industry.
