In the wake of FTX’s collapse, several major crypto exchanges are suspending deposits in Solana-based Tether (USDT) and USD Coin (USDC). FTX and SOL were closely tied financially.
Binance Ban
Binance announced last Thursday it was temporarily suspending deposits for Solana-based USDC and USDT tokens “until further notice.” The exchange further added that it “reserves the right in its sole discretion to amend, change, or cancel this announcement at any time and for any reasons without prior notice.”
The exchange later resumed deposits for USDT “after internal assessment and review.” As of the time of writing, there is no information yet on when it will resume deposits for Solana-USDC.
Others Follow
Crypto exchanges such as OKX, ByBit, and BitMEX have also suspended deposits for Solana-based stablecoins.
OKX announced on Nov 17 that it would suspend both deposits and withdrawals for both tokens starting at 3:00 AM UTC on November 17, 2022. It, however, maintained that the decision does not affect other networks.
Bybit also paused the deposits and withdrawals of both USDC and USDT on Thursday, while BitMEX halted such deposits at 13:20 UTC.
On-chain data shows $5 billion in USDC is circulating on Solana, which is 11% of USDC’s total market cap. The current supply of SOL-Tether is $1.9B, which is 1.3% of the token’s total market capitalization.
Reason for Delisting
Both Sam Bankman-Fried’s companies, FTX and Alameda Research are major investors in the Solana network.
The ongoing FTX scandal has severely damaged the Solana ecosystem. The situation worsened when FTX filed for Chapter 11 bankruptcy. The news has set off a spree of withdrawals from Solana. The blockchain, which was once touted as Ethereum’s competitor, has seen a significant drop in its value over the past 30 days. Down by 60%, according to CoinGecko — three times the losses recorded for Bitcoin and Ethereum.
The Solana Foundation also reportedly lost millions of dollars in their FTX-related investments.
Circle, one of the two firms behind the issuance of USDC tweeted that the stablecoin is operating normally and there are no problems regarding issuing and redeeming the token. It also added, “USDC is always redeemable 1 for 1 for US dollars. Any amount. Any time. For Free. Always.”
Stablecoin Safety
The two stablecoins USDT and USDC on Solana are issued by Tether and Circle, respectively. Both firms have not reported any financial crisis.
Tether CTO Paolo Ardoino took to Twitter to give his opinion on why exchanges are suddenly delisting stablecoins suddenly.
Metaplex Shrinking
Meanwhile, as a ripple effect of FTX’s collapse, Solana’s NFT protocol maker Metaplex announced its plan to layoff employees. While the number of the team members to be sacked has not been disclosed, the company’s co-founder and CEO Stephen Hess wrote took to Twitter to explain their reasoning.
“While our treasury wasn’t directly impacted by the collapse of FTX and our fundamentals remain strong, the indirect impact on the market is significant and requires that we take a more conservative approach moving forward,”
CEO Stephen Hess
Metaplex Protocol was built to serve the entire Solana’s NFT community, and the firm was on its way to becoming Ethereum’s major competitor in the NFT space. Metaplex was able to raise $46 million in January this year in a funding round which was led by Multicoin Capital and Jump Crypto with participation from Solana Ventures, SBF’s investment firm, Alameda Research, Animoca Brands with other 90 individual supporters.
SOL’s Plunge
The native token of the Solana blockchain, SOL has seen its price drop in recent days following the crisis that has been troubling the crypto market. The token, which opened at $36.77 on Nov 6, is now currently trading at $13.25 as of the time of writing.
