The ongoing FTX saga has been one of the most captivating scandals in the crypto industry this year. Following a liquidity crisis, the exchange is on the brink of collapse or possibly being bought over by Binance. But even as this all unfolds, FTX itself is not the only institution being affected.
In the wake of the crisis, the exchange has suspended all client withdrawals. This means, in essence, that not only can its individual clients not access their money but neither can its institutional clients. The latter, naturally, will affect the liquidity of different businesses, with BlockFi suspending its own client withdrawals.
Now, Chain, a blockchain infrastructure company, has announced that it will be auctioning several of its NFTs due to liquidity issues caused by the saga.
Chain Goes to Auction
This NFT auction was made public by Chain’s CEO on Twitter who announced that the NFTs will be auctioned or turned over to a fractional DOA. The latter would mean that fractions of ownership of the NFTs would be sold. The firm is reportedly seeking to raise 800 ETH from the sales of the NFTs.
“My NFT Collection is now available. It will either be sold to the highest bidder or be placed in a fractional DAO where I will be selling 80% ownership for 8k ETH to the community. DMs open. Check them out,” the tweet said.
Among the assets to be sold are Alien Tiffany Punk 5822, 9 Tiffany Punks, Gold Ape 232, 6 BAYCs, 3 Mutants, 4 Otherside plots and an ENS. All these are blue-chip assets which begs the question of why the company is choosing to sell them off.
Well, according to a Twitter thread by its CEO on November 10, 2022, this is all the fault of FTX. Apparently, the company has holdings in FTX and just recently made a major deposit to it. The fact that withdrawals have been suspended means that Chain cannot get its money out.
Now, it has resorted to selling the NFTs in its roster before it too is dealing with an FTX-type liquidity crisis. The situation is rather unfortunate given the rarity of some of the assets and this was a sentiment shared by several Twitter users.
It has not yet been revealed if any of the NFTs have been sold and how much has been raised if so.
The Ripple Effect of Crypto Collapses
When a giant like FTX collapses, it is inevitable that there will be an effect on the industry, both on individuals and institutions. But this collapse is different from those of the past because we are seeing, in real-time, the role that NFTs play.
This is because many crypto holders also use NFTs as a store of wealth or to hedge their bets against the market. When liquidity is low, these NFTs can then be sold off as we have seen in Chain’s case. And if the FTX saga is not sorted out soon, they might not be the last to sell their NFTs to stay afloat.
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