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Solana Loses $1 Billion In USDT to Ethereum Due To FTX Collapse

The chain swap announcement comes as Solana faces difficulties due to the ongoing turmoil in the crypto market created by FTX's collapse.
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Solana Loses $1 Billion In USDT to Ethereum Due To FTX Collapse

A $1 billion chain transfer to convert USDT from the Solana blockchain to the Ethereum blockchain was just announced by stablecoin issuer Tether. During this process, Tether noted that there won’t be any change in the total supply of the number of tokens.

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Tether’s Chain Swap Events

The announcement comes as Solana, which was among the top 5 cryptocurrencies by market cap only a few weeks ago, is having problems due to the failure of cryptocurrency exchange FTX.

Transferring cryptocurrency from one blockchain to another is referred to as a ‘chain swap’. Whenever demand for using its stablecoins shifted from one blockchain to another, Tether performed this process many a time in the past. For instance, in mid-2020, Tether swapped $1 billion in USDT from Tron to Ethereum twice.

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Solana’s Exposure To FTX Proves Fatal

The collapse of FTX and Alameda Research has been especially brutal on the blockchain and its native SOL token, and for good reason: the now-bankrupt Alameda was SOL’s single-largest investor and its former CEO Sam Bankman-Fried personally pitched it as an Ethereum alternative.

The Solana Foundation, a non-profit organization that supports the development of the Solana blockchain, also acknowledged having $1 million in cash or other equivalent assets that were trapped on FTX.

However, earlier, Solana’s co-founder vehemently denied to having large exposure on FTX or that the bankruptcy would have any catastrophic effect.

Read More: Solana Labs Didn’t Have Much Assets on FTX, Says Co-Founder

But, as reported earlier on CoinGape, FTX financed Alameda Research, its affiliated trading firm, billions of dollars worth of customer assets to finance risky trades, paving the way for its sudden collapse. And along with it, it took some of its associated projects like Solana for one, down. With only $1 Billion in liquid assets, FTX failed to bridge the gap and eventually had to file for bankruptcy.

Read More: FTX Exchange Finally Files For Bankruptcy

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Market Reaction

Solana has lost 25.4% during the past week and is currently ranked 16th by market cap. The price recorded at the time of writing is $13.33, which is 95% below the all-time high of $256.

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Pratik Bhuyan

Pratik has been a crypto evangelist since 2016 & been through almost all that crypto has to offer. Be it the ICO boom, bear markets of 2018, Bitcoin halving to till now - he has seen it all.

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Why trust CoinGape: CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights to our readers. Our journalists and analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.
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