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FTX Transfers More Than $4 Million CRO to Coinbase: Here’s What This Could Mean

Last Updated January 5, 2024 9:21 AM
Teuta Franjkovic
Last Updated January 5, 2024 9:21 AM

  Key Takeaways

  • FTX and Alameda continue to transfer assets to Coinbase.
  • Despite these transfers, FTX and Alameda still hold significant crypto assets.
  • The reasons for these transfers are unclear.

Cryptocurrency trading platform FTX and its affiliated firm, Alameda Research, have garnered attention in the cryptocurrency world due to a sequence of transactions  made to Coinbase, involving a sum of $4.17 million in CRO tokens.

These actions take place against a backdrop of contentious issues. There is controversy surrounding FTX’s strategies for reimbursing its creditors. Meanwhile, its co-founder, Sam Bankman-Fried, faces up to 100 years in prison.

Fueling Speculation

In a notable turn of events, on-chain data monitoring service SpotOnChain reported  that FTX and Alameda transferred 44.19 million CRO tokens into Coinbase. These transactions, carried out in four separate batches during the early hours of Thursday, January 4, further fuel speculation about the connections between these entities, especially considering their past dealings with Coinbase.

Over the recent fortnight, FTX and Alameda have jointly moved a variety of tokens into Coinbase, totaling a value of $13.99 million. This assortment of tokens includes Ethereum (ETH), Crypto.com Coin (CRO), Math (MATH), Maple (MPL), and Bluzelle (BLZ).

Despite these significant transfers, wallet addresses  belonging to FTX and Alameda continue to hold cryptocurrency assets valued at more than of $278 million. Among these, the most substantial holding is 25 million Worldcoin (WLD) tokens, worth around $77.7 million.

Controversial Repayment Plan

The recent transfers by FTX and Alameda are unfolding amidst controversy regarding FTX’s repayment approach to its creditors. Last month, FTX disclosed a repayment strategy that determined the value of cryptocurrencies based on their market prices as of November 2022. This method of valuation sparked considerable dissent, primarily because it significantly undervalued several major cryptocurrencies.

In the framework of this repayment plan, FTX assessed Bitcoin (BTC) at $16,000, Ethereum (ETH) at $1,200, and Solana (SOL) at $16. These valuations are markedly lower than their current market values. Presently, Bitcoin is trading around $43,000, Ethereum at $2,200, and Solana at $100, as per the latest figures from CoinMarketCap. This discrepancy between the repayment plan’s valuations and the current market prices has intensified the scrutiny and criticism of FTX’s proposed repayment strategy.

How This Is Even Possible?

Under US bankruptcy laws, a company’s assets are usually frozen in bankruptcy proceedings. This means that the company cannot sell or transfer its assets without the permission of the bankruptcy court. However, there are a few exceptions to this rule.

In the case of Alameda and FTX, the bankruptcy court has granted them permission to transfer some of their assets in order to meet their obligations to creditors. This includes transferring assets to Coinbase to repay loans they have taken out.

The bankruptcy court will typically only grant permission to transfer assets if there is a good reason for doing so. In this case, the bankruptcy court is likely satisfied the transfers are necessary to ensure creditors are treated fairly.

Why a Court Might Allow Asset Transfers

Here are some of the reasons why a bankruptcy court might grant permission to transfer assets:

  • To meet the company’s obligations to creditors. This is the most common reason for transferring assets. The bankruptcy court will want to ensure that creditors receive the money they are owed.
  • To continue the company’s business operations. In some cases, it may be in the best interests of creditors to allow the company to continue operating in order to generate revenue that can be used to repay debts.
  • To preserve the value of the company’s assets. In some cases, it may be necessary to transfer assets to a more secure location or to a trustee who can manage them more effectively.

The bankruptcy court will carefully consider all of the relevant factors before granting permission to transfer assets. They will want to ensure that the transfers neither defraud creditors nor benefit certain shareholders or insiders.

In the case of Alameda and FTX, the bankruptcy court has reviewed the company’s financial statements and other relevant documents. They have also consulted with creditors and other interested parties. Based on their review, the bankruptcy court is satisfied that the transfers are necessary and that they are being made in good faith.

SBF Still Awaits Sentencing

Co-founder Sam Bankman-Fried’s legal issues makes FTX’s situation even more complicated. In November, the disgraced former billionaire was found guilty on charges of market manipulation, money laundering, and the misuse of customer funds. Recently, prosecutors involved in the case have decided against proceeding with a second trial that was initially scheduled for March.

This decision sets the stage for Bankman-Fried’s sentencing in March. The 31-year-old faces a potential prison sentence of more than 100 years.

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