Inside the relationship between Sam Bankman-Fried's FTX and Solana, the blockchain he championed whose token is down 96% from its highs
- Sam Bankman-Fried was a big supporter of Solana, the layer-1 blockchain that bills itself as a faster alternative to Ethereum's network.
- He backed projects on its ecosystem, and his firms amassed huge sums of the blockchain's native token, also called Solana (SOL).
Sam Bankman-Fried was a big supporter of Solana, the layer-1 blockchain that bills itself as a faster alternative to Ethereum's network.
The disgraced former crypto mogul backed projects in its ecosystem, and his firms amassed huge sums of the blockchain's native token, also called Solana (SOL).
But the altcoin has crashed 46% since Bankman-Fried's FTX filed for bankruptcy on November 11 and is down 96% from its record high in November 2021, according to Messari on Thursday. Once boasting a market value of nearly $80 billion, it's now just $3.4 billion.
Here are some of the ties that the FTX founder and Solana built.
Bankman-Fried, who is now facing several fraud charges, previously told Fortune that Solana could become critical infrastructure for the future of digital assets.
"They were by far the most serious [layer 1] we talked to about continuing to scale their blockchain and expand its opportunities," he said in an email.
He started Serum, a decentralized exchange built on its blockchain, and also invested in several projects built on Solana's network.
Meanwhile, Bankman-Fried's hedge fund Alameda Research and crypto exchange FTX purchased large sums of SOL tokens from the Solana Foundation, the nonprofit that supports the blockchain, and Solana Labs, the blockchain's developer.
The transactions between the two firms and the Solana Foundation along with Solana Labs included 58 million SOL tokens, which is worth $543 million based on the cryptocurrency's current price.
"I'm still trying to square what I perceive him to be and like what actually happened," Anatoly Yakovenko, cofounder and CEO of Solana Labs, told Bloomberg of Bankman-Fried. "It just feels really, really jarring."
For its part, the Solana Foundation had around $1 million of its cash or cash equivalents on FTX.com when the trading platform stopped processing customer withdrawals in early November, according to a blog post. That's less than 1% of the foundation's cash or cash equivalents, and there was no SOL custodied on the exchange.
Solana cofounder Raj Gokal said the organization does not know how FTX and Alameda's assets will be handled during the bankruptcy proceedings, adding that "there's no impact on the security of the network from things like the concentration of SOL tokens on Alameda's balance sheet."
But following FTX's downfall, popular projects built on Solana like y00ts and DeGods decided to leave its network for Polygon and Ethereum. That's despite the fact that around 80% of projects on Solana's blockchain had zero exposure to FTX, Yakovenko told Bloomberg.
"There's definitely more to Solana than FTX," he said.
Gokal believes the controversy surrounding Solana and Bankman-Fried's bankrupt firms will eventually die out. "Crypto has a pretty short memory," he said.
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