UPDATE: soBTC largely recovered in price after FTX US reopened withdrawals, restoring a critical offramp for the wrapped bitcoin asset.
A Solana-based crypto asset tied to the price of bitcoin temporarily collapsed in value Friday after CoinDesk reported that FTX US – the only venue left to exchange it for real bitcoin – had frozen withdrawals.
The wrapped asset later recovered much of its value after FTX US inexplicably reversed course and reopened withdrawals, allowing traders to once again exit their positions. FTX US communicated neither move to the public.That soBTC would follow FTX into the proverbial “Goblintown” would surprise few in Solana’s decentralized finance circles, many of whom had long speculated that FTX and Alameda held the bitcoin that backed it.
FTX was the only place traders could redeem their Solana-based bitcoin for real bitcoin. Shuttering withdrawals Friday, FTX effectively stranded everyone who still held the 16,000-odd soBTC still in circulation at press time Friday. Part of that could be due to DeFi projects preparing for the worst. Crypto lending protocols Solend andand decentralized exchange Mango Markets took steps to limit their and their users’ exposure in the final hours Friday.
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