Wrapped tokens on Solana issued by FTX or Alameda Research are experiencing sharp declines after both entities filed for Chapter 11 bankruptcy protection.
The price of wrapped bitcoin on Sollet is down 77% over the past 24 hours. Its current price is $3,866 — a far cry from the price of native bitcoin's current $16,819 — according to CoinGecko, which is displaying a notice on its website that reads: "soBTC tokens are wrapped BTC tokens issued by FTX or Alameda. Both these entities have filed for Chapter 11 bankruptcy and the BTC tokens are no longer redeemable."
Wrapped ether on Sollet is only down 9% to $1,138 over the same time frame. Native ether is trading at $1,255. CoinGecko is displaying the same warning for soETH as for soBTC.
Wrapping coins, such as bitcoin or ether, on Solana makes those assets available to use on the Solana blockchain — opening them up to usage in Solana's decentralized finance ecosystem.
Many Solana-wrapped assets were custodied by FTX or Alameda, according to open-source portfolio tracker Rotkiapp's founder on Twitter, which added: "That means they are no longer redeemable and will probably go to 0." Pseudonymous crypto writer Aylo also noted that "Solana DeFi will have to absorb this loss."
Disclaimer: The former CEO and majority shareholder of The Block has disclosed a series of loans from former FTX and Alameda founder Sam Bankman-Fried.
© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.