NEW YORK (Reuters) – The price of Solana, a cryptocurrency token that had been lauded by FTX founder Sam Bankman-Fried, fell 10.36% on Wednesday, and is down 94.2% so far in 2022.
The collapse of FTX has rippled across the industry, hobbling liquidity at firms with exposure to what was once one of the world’s biggest crypto exchanges.
Solana, or SOL, is the token behind the upstart Solana blockchain, which supports smart contracts, including non-fungible tokens, and has emerged as a rival to the ethereum blockchain.
Bankman-Fried, who is expected to enter a plea next week to criminal charges he defrauded investors and looted billions of dollars in customer funds at FTX, frequently praised Solana. FTX and Alameda, Bankman-Fried’s trading firm, held Solana tokens on their balance sheets.
While Solana has no direct relation to FTX, and had limited exposure to the failed exchange, its association with Bankman-Fried has been a drag.
“The general problem with crypto is that its lack of intrinsic value means that values are based on confidence and perceived utility. If those suffer in relation to a specific token, then it suffers,” said Steve Sosnick, chief strategist at Interactive Brokers.
A representative for Solana was not immediately available for comment.
SOL has dropped 51.14% since the furor around FTX began unfolding on Nov. 2. In the same period, ether has fallen about 21.3% and bitcoin 17.6%.
The price of Serum, or SRM, the token for the decentralized exchange of the same name created by Bankman-Fried on the Solana blockchain, is down 80.5% since Nov. 2, trading at just over 14 cents, according to coinmarketcap.com.
The total market capitalization of the cryptocurrency market now stands at $798.4 billion, according to the website, down from a peak of over $3 trillion in Nov. 2021.
(Reporting by John McCrank; Editing by David Gregorio)