Sunday, March 26, 2023
HomeCryptocurrencyFTX hack, bankruptcy filing, and Solana Crash

FTX hack, bankruptcy filing, and Solana Crash


  • Hours after the bankruptcy filing, collapsed FTX exchange experienced a nine-figure hack.
  • The value of Solana crashed 12% following the FTX hack.

Related: How To Avoid Being a Victim of Virtual Maniacs in the Metaverse?

Solana, the high-flying cryptocurrency, took a big hit overnight as hackers breached the popular FTX exchange. Solana crashed 12% in value as investors scrambled to sell off their holdings. This is a major setback for Solana and its community of supporters, who had been riding high on a wave of positive momentum in recent weeks. It remains to be seen how the project will recover from this attack, but it is clear that the crypto sphere is still a very volatile place. Let’s first understand what FTX and Solana are before moving on.

FTX Exchange: What is it?

FTX the leading centralized cryptocurrency exchange is known for its expertise in leveraged and derivatives products. Although FTX has its official headquarters in the Bahamas, it is controlled from the US, with its two largest offices being in Chicago and Miami. Sam Bankman-Fried, an MIT alumnus and former trader of international exchange-traded funds at Jane Street Capital, founded FTX in 2018.

It provides a variety of trading products, such as derivatives, options, volatility products, and leveraged tokens. Because it processes the majority of cryptocurrency trades globally, together with rival Binance, FTX is important and big. Unfortunately, recently FTX hack made the headlines and it affected the cryptocurrencies badly.

What exactly is Solana?

Solana is just another blockchain network made specifically for the creation of cryptocurrencies like Bitcoin and Ethereum. Because of its higher transactional speed compared to Ethereum, it is a superior alternative. The new blockchain technology would be able to process up to 50,000 transactions per second. SOL can swiftly integrate a variety of features into the current network, such as app development or SOL token mining. The cryptocurrency has rightfully gained the reputation of being an Ethereum rival. Recently, the FTX hack caused a Solana crash.

FTX hack: what actually happened?

The collapsed cryptocurrency exchange, FTX, has been hacked and is at the center of a rapidly developing drama.

A few on-chain sleuths flocked to Twitter a few hours after the troubled company revealed it was declaring Chapter 11 bankruptcy filing to draw attention to several questionable outflows from the exchange to outside wallets. Over $400 million was transferred to addresses on the Ethereum, Solana, BNB Chain, and other crypto networks, however the entire extent of the damage is still unknown. FTX hack has been compromised. An admin going by Rey posted on the exchange’s official Telegram channel that all cash appeared to have vanished.

“FTX has been hacked. FTX apps are malware. Delete them. Chat is open. Don’t go on the FTX website as it might download Trojans”

Bankruptcy Filing

A few of the organization’s surviving employees were “investigating abnormalities with wallet movements,” according to Ryne Miller, the US’ general counsel, who replied to the event on Twitter early on Saturday. Later, he confirmed that team members had transferred assets from FTX and FTX.US to cold storage “to mitigate harm upon detecting unauthorized transactions.”


What happened to FTX?

Some have theorized that the incident of the FTX hack may have been an inside job due to the magnitude of the hack, which saw the attackers obtain unrestricted access to numerous regions of the exchange to drain hundreds of millions of dollars across various crypto networks. Many former FTX employees acknowledged to me they do not recognize these transactions suggesting they were unrelated to the FTX hack, according to on-chain detective ZachXBT’s tweet.


Tether promptly froze the $31.4 million worth of USDT that had been transmitted during the hack. Elon Musk added his voice to the discussion by stating that Twitter was “tracking the hack in real-time.”


After a week of instability in the cryptocurrency market brought on by FTX’s failure, the attack was announced. This week, it was revealed that the exchange went bankrupt as a result of the former CEO Sam Bankman-Fried using customer cash valued at billions of dollars to save his trading company, Alamada Research.

What’s next for FTX?

The company must either locate billions of dollars to satisfy client withdrawal requests, or it must find a means to reassure customers that their money is secure to stop the exodus. When there are so many consumers running for the door, that is never simple. According to Bloomberg, Bankman-Fried stated that the company had a $8 billion cash deficit and required $4 billion to remain solvent.

Deeper inquiries are also open for discussion. Bankman-Fried tweeted that FTX was “good” and that it did not trade at all with customer assets the day before the business decided to sell to Binance. However, Sequoia Capital, a venture capital firm that invested $150 million in FTX, warned investors in a letter that the company was experiencing solvency issues, which meant it owed more money than it actually had.

“SBF” reappeared the day after the sale fell through and apologized for his mistakes.
Users were still confused despite Bankman-Fried’s apology, especially in light of other statements he was simultaneously making. According to The Wall Street Journal, FTX loaned Alameda $10 billion in customer funds to be used for gambling, representing a sizable portion of the exchange’s $16 billion in assets.


How did Solana Crash?

What happened?

The FTX bankruptcy has caused the cryptocurrency markets to be in a risk-off mode as an of  esult Sthe olana crash as well, with asset prices dropping sharply for all crypto tokens, fungible and nonfungible.

After FTX’s bankruptcy filing, within four days, the total market value of all cryptocurrencies dropped by 23%, from $1.02 trillion to $786 billion. According to Nansen’s NFT-500 index, the cost of nonfungible tokens (NFTs) on the well-known Ethereum blockchain decreased by 14% within the same time frame. Solana crash has the highest effected magnitude. Solana NFTs were impacted even worse; according to SolanaFloor, their total floor value over the past few days fell by 68%, from $424 million to $135 million.

The floor price of the Bored Ape Yacht Club sank 43% to $60,000, CryptoPunks went down 37% to $69,000, and MoonBirds fell 51% to $6,800, among other prominent Ethereum blue-chip collections. DeGods floor price decreased 66% to $2,700 on Solana, Solana Monkey Business decreased 68% to $2,000, and y00ts increased 70% to $840. The Solana crash has the greatest impact of FTX hack.

FTX’s support for the Solana layer-one blockchain contributes to the underperformance of Solana NFT collections. The cost of the Solana coin plummeted by 68% to $12 as the exchange imploded. FTX’s fungible exchange token, FTT, and its Solana-based decentralized exchange (DEX), Serum, are down 89% and 53%, respectively, in recent days. Nonfungible tokens, which represent collections of items like artworks that might differ from one another, have also fallen recently.

Though the FTX bankruptcy filing tale is still in progress, things are beginning to make sense. A hedge fund that made bad discretionary bets with the assets, Alameda Research, was a sibling company of the exchange that it leased out customer cash. Due to the $10 billion balance sheet hole that was left behind by the collapse of Alameda, FTX became insolvent and on Friday, November 11, filed for bankruptcy court protection.

Broader Perspective

FTX became a significant NFT participant. The exchange established its marketplace, partnered to assist new issuances, and made strategic investments in leading NFT projects.

The Bored Ape Yacht Club’s developer, Yuga Labs, received investment from FTX Ventures, the $2 billion venture finance arm of FTX. In Doodles’ most recent series A investment round, which saw $54 million raised at a valuation of $704 million, FTX Ventures also took part. Doodle is a provider of pastel profile photo avatars.

The major issuances of new NFT collections have also been made by FTX. To provide concertgoers with special perks and experiences, FTX teamed up with the music festivals Coachella and Tomorrowland to issue NFTs. Additionally, it collaborated with well-known companies and teams, such as Mercedes F1, Dolphin Entertainment, the Golden State Warriors, and the Washington Wizards and Capitals, to boost its collections.

FTX’s NFT platform failed to take off despite these well-known alliances. Curiously, NFT volume increased to $13 million as FTX’s liquidity was questioned recently. Probably, customers who bought NFTs and subsequently withdrew those assets to recover value from the exchange triggered this spike by getting over FTX’s ban on the withdrawal of fungible tokens.

Important Figures

  • A U.S. subsidiary of the international cryptocurrency exchange FTX is known as FTX.US. One of the largest international exchanges in terms of trading volume, FTX serves both institutional and retail clients.
  • Hedge fund Alameda Research engaged in trading and market-making on the FTX exchange.
  • Founder and former CEO of FTX and Alameda Research, Sam Bankman-Fried (SBF)

Major Statistic

Solana-based markets Magic Eden, OpenSea, and Solanart—denominated in the solana cryptocurrency—have seen notable increases in NFT trading activity, which has more than tripled to over 250,000 solana moved daily from just 80,000 a week ago. This rise in volume shows that as NFT prices fell, holders were fleeing and selling their NFTs as a result of the FTX incident.

FTX hack, Bankruptcy filing, Solana Crash



The full degree of the harm and the spread of contagion brought on by FTX hack is still unknown. Investors are advised to remove their digital assets, such as NFTs, from exchanges and other centralized platforms and take possession of them until things are resolved.

Another risk-off phase has entered the market, and it may take some time before confidence returns. Comparing NFTs to other key crypto assets like bitcoin and ether, high beta plays on the remainder of the crypto market are riskier and magnify gains on both the upside and downside. Therefore, until the situation is rectified, riskier investors might want to hold off on buying NFTs.

Other top layer-one protocols and their developing NFT ecosystems, such ethereum, binance smart chain, polkadot, and avalanche, may be supported by investors looking to place long-term investments. These alternatives might perform better than solana since solana and initiatives based on it are unclear.

More to read:

Follow Crypto Stoshi: Twitter, Telegram

Disclaimer: This blog is for educational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.




Please enter your comment!
Please enter your name here

Most Popular