On October 3, 2024, the cryptocurrency community is bracing for the much-anticipated auction of 22 million Worldcoin (WLD) tokens, valued at $38 million, by the FTX estate. As part of FTX’s ongoing efforts to recover funds following its high-profile collapse in 2022, this auction has stirred both excitement and controversy. Investor bids will start at $2.5 million, with a potential discount of up to 75% on the market value of the tokens.
A High-Profile Auction in the Wake of FTX’s Collapse
Since its dramatic downfall, FTX has been liquidating its remaining assets, and this Worldcoin auction marks the latest chapter in the estate’s attempts to repay creditors. The 22 million Worldcoin tokens up for auction will be sold under a lengthy unlocking schedule, which extends until 2028. Starting on December 1, 2024, around 20,000 WLD tokens will be unlocked daily, slowing down to about 14,000 tokens per day by July 2026. This unlocking period presents both challenges and opportunities for prospective buyers.
While the potential for a 75% discount—which would bring the token price to roughly $0.40, down from the current market price of $1.63—may seem like a bargain, the long-term unlocking process raises concerns about liquidity and market volatility.
Worldcoin Auction: Deep Discounts and Market Volatility
The prospect of a steep discount has captured attention, but it also raises significant questions. A large portion of the cryptocurrency community worries that selling these tokens at such a massive markdown could lead to further price instability in the Worldcoin market. Historically, large asset auctions like this have had ripple effects on the market. Investors may be drawn to the discounted tokens, but the delayed unlocking could limit the immediate liquidity of their investment.
In comparison, FTX faced similar criticism earlier in May 2024 when it sold off Solana (SOL) holdings at a steep discount of 70%, leading to discontent among creditors. At the time, Solana tokens were auctioned for as low as $102 despite trading at $180 on the open market. This sparked intense backlash, as the eventual value of those tokens soared post-sale, highlighting the dangers of rapid liquidations without proper market timing.
The Worldcoin auction may mirror this situation. With tokens unlocking over four years, investors will need to wait for gradual releases, which could slow their ability to capitalize on price surges and limit immediate returns.
Auction Terms: A Bargain with Conditions
While the potential for acquiring Worldcoin at a significantly reduced price might seem like an investment opportunity, the long unlocking period and volatile market conditions could lead to a complex financial outcome. Investors will need to carefully weigh the benefits of acquiring tokens at a low price with the challenges posed by the unlocking schedule and market risks.
The timing of the Worldcoin auction comes amid rising tensions between the FTX estate and its creditors, many of whom feel that the estate’s strategy of offloading assets at deep discounts shortchanges them. Critics, like Sunil Kavuri, have openly expressed their frustration with the estate’s liquidation tactics, pointing out past missed opportunities. Kavuri has pointed to previous asset sales where deep discounts were applied, only for token prices to later surge—leaving creditors with minimal returns.
The Fallout: Worldcoin’s Future in Question
The Worldcoin auction isn’t happening in isolation. The cryptocurrency market has been rocked by recent rumors and speculation about FTX creditor payouts, which has already influenced asset prices. For instance, rumors of an imminent payout to creditors in late September caused a spike in FTX’s native token, FTT, with its price jumping over 70%. These rumors proved premature, but they demonstrated how market movements are tightly linked to developments in the FTX bankruptcy process.
With the Worldcoin auction looming, the big question remains: will the deep discount serve as a strategic move to recover funds efficiently, or will it cause more harm by destabilizing the market and reducing potential creditor returns? Investors need to consider both the long unlocking period and the volatility risks before diving in.
Conclusion: A Double-Edged Sword for Investors
The FTX auction of 22 million Worldcoin tokens presents a rare opportunity for investors to acquire assets at a steep discount, but it comes with significant conditions. The long unlocking period, market volatility, and concerns from creditors add complexity to the deal. While some may see this as a chance to capitalize on underpriced tokens, others may be cautious, wary of the long-term implications.
As the cryptocurrency market watches closely, this auction could set a precedent for how bankrupt entities handle asset liquidation in the future. Whether Worldcoin sees a surge in value or faces continued market volatility, one thing is certain: the outcome of this auction will be critical in shaping the near-term trajectory of both Worldcoin and the FTX estate’s recovery efforts.
