FTX Moves Funds to Binance: Preparing Sale to Compensate Customers?

Recently blockchain analytics platform Spot On Chain noted that wallets likely linked to Alameda Research and FTX had moved over $10 million worth of cryptocurrency to Coinbase and Binance deposit addresses. This occurred via another unidentified address within the space of about 5 hours on October 24-25. Crypto analytics company Nansen confirmed the data, saying that "presumably, this is to either sell or to prepare to sell these funds."

Currencies transferred included ETH, MKR, AAVE, LINK, some COMP and RNDR. The biggest transaction, worth over $5 million (2,904 ETH) at the time, was executed at 8:18 pm UTC on October 24 from an address “likely” to belong to FTX to another unknown address. The unknown address then transferred $3.4 million to a Binance deposit address and $1.8 million to a Coinbase deposit address.

This September a Bankruptcy Court approved the liquidation of $3.4 billion worth of FTX and Alameda crypto assets, excluding Bitcoin, Ether, and “certain insider-affiliated tokens.” The excluded assets can be sold only with a special 10-day notice, and are subject to the approval of the committees and the trustee appointed by the U.S. DOJ. Other assets are expected to be sold gradually, following special guidelines and weekly limits so as not to disrupt markets and impact prices.

Apart from liquidating assets, FTX has staked over $100 million in Solana tokens and almost $6 million of Ethereum (3,200 ETH) this month. The possibility of staking certain assets in order to generate passive yield was requested by FTX in August. In the same filing, the Debtors proposed utilising the digital assets to create and preserve value for the creditors by "generating yield, including through call overwriting and derivatives trading, and hedging against potential downside exposure."

This month, the FTX Debtors submitted a settlement plan, which suggests that over 90% of all recovered funds will eventually go to customers. According to a notice to stakeholders, the firm has recovered about $7 billion in total so far, including the aforementioned $3.4 billion in cryptocurrency. The latest movement of funds is likely to be in preparation to sell these digital assets, to add to recovered funds and pay back customers.

The Shortfall Claim is currently estimated at $8.9 billion for FTX.com users and $166 million for customers of FTX US, so the $10 million seems to be just a drop in the ocean for now, but investors are quite optimistic about the final outcome: at the moment the market value of FTX claims is rising. Traders are paying up to 50 cents on the dollar and are obviously expecting to get significantly more than this when the claims are finally settled.