One year after the downfall of Sam Bankman-Fried, the founder of the crypto empire, the landscape has drastically changed for FTX Holdings, particularly with the soaring success of Solana. The chain of events leading to Bankman-Fried’s crypto empire collapse started with a CoinDesk article published on November 2, 2022. The article exposed Alameda Research, Bankman-Fried’s trading firm, being filled with FTT tokens from his FTX exchange, revealing a closer connection between Alameda and FTX than previously acknowledged. Subsequent revelations suggested that Alameda and Bankman-Fried allegedly misappropriated FTX customers’ funds for personal use, leading to FTX and Alameda filing for bankruptcy.
As the criminal fraud and conspiracy trial against Bankman-Fried nears its conclusion, FTX, the company, is still in bankruptcy court. However, there is an unexpected turn of events. Despite the grim situation a year ago when the company was in freefall and customers were struggling to recover their funds, recent estimates from Matrixport suggest a potentially higher-than-expected recovery of 37 cents on the dollar for creditors during the company’s reorganization.
A significant factor contributing to this optimistic recovery estimate is the substantial growth in the value of the bankruptcy estate, boosted by the remarkable rally in the price of Solana’s native token, SOL. FTX holds a substantial amount of SOL tokens, with the majority being locked up and not immediately tradable on the market. The market value of these SOL holdings, initially estimated at $1.16 billion, has seen a surge from $20 per token to around $40.
Thomas Braziel, CEO of 117 Partners, which advises investors on distressed assets, expressed amazement at the positive impact of SOL on FTX’s situation. Despite approximately $10 billion in customer claims against the company, Braziel believes that if SOL’s price reaches $50 to $60, creditors could recover at least 80% of their money, turning the odds significantly in their favor.
However, there are complexities involved, as FTX’s SOL holdings are not immediately accessible. The majority of these tokens are frozen until 2027 or 2028, adding a layer of intricacy to the situation. Braziel emphasized the need for the estate to liquidate these assets effectively.
In addition to the SOL windfall, discussions have emerged about reopening the FTX exchange to generate more funds for creditors. Moreover, Bankman-Fried’s backing of the artificial intelligence startup, Anthropic, has proven beneficial, with recent funding boosts from major players like Amazon and Google potentially increasing the value of FTX’s stake.
Despite the legal challenges and allegations of wrongdoing, FTX’s fortunes have experienced a remarkable turnaround, contrasting sharply with Bankman-Fried’s personal predicament. As jurors prepare to deliberate his fate, the anniversary of the CoinDesk story that triggered the chain of events leading to his downfall is a stark reminder of the tumultuous journey over the past year.