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The Solana cryptocurrency nightmare seems endless. 

The token, known as SOL, is one of the few cryptocurrencies directly linked to Sam Bankman-Fried, the disgraced king of the crypto sphere who filed for Chapter 11 bankruptcy of his crypto empire on November 11.

FTX, the exchange cryptocurrencies he co-founded in May 2019, was unable to meet withdrawal requests from worried and panicked customers. Besides FTX, Bankman-Fried also founded Alameda Research, a hedge fund that also acts as a trading platform for institutional investors. 

Alameda went also bankrupt. Bankman-Fried, known by the initials SBF, is accused of loaning $10 billion in funds from FTX clients to Alameda Research when the two companies were supposed to be independent.

The former trader is facing a series of criminal and civil charges from regulators. SBF was extradited to the United States on Dec. 21 by the authorities of the Bahamas, where he lived and where FTX is headquartered. 

SOL Is Down 96.4% From Its All-Time HighHe was released after his parents, both law professors at Stanford, signed a $250 million recognizance bond pledging their California home as collateral. Two other friends with significant assets also signed, according to news reports.

“Bankman-Fried was orchestrating a massive, yearslong fraud, diverting billions of dollars of the trading platform’s customer funds for his own personal benefit and to help grow his crypto empire,” the Security and Exchange Commission (SEC) alleges in its civil complaint.

All of these developments are negative for the Solana token, dubbed in the crypto sphere ‘Sam coin.” The token’s prices are down 96.5% since their all-time high reached on November 6, 2021. 

SOL is currently trading around $9.15 against $259.96 on November 6, 2021. On November 10, 2022, a day before the FTX bankruptcy, SOL prices were around $17.84. They thus lost 49% in less than two months.

Solana is a token issued by the Solana Blockchain, which makes it possible to develop decentralized finance or DeFi projects that offer financial services such as loans, mortgages, financial products, etc.

The cryptocurrency is tied to an on-chain crypto exchange called project Serum, created by Bankman-Fried, who resigned on Nov. 11, following the bankruptcy of his empire. Serum is a liquidity hub.

Serum is one of the foundations of the Solana DeFi infrastructure, as it is the protocol and ecosystem that brings high speed and low transaction cost to Solana DeFi. It implements a on-chain central limit order book and matching engine, allowing to share liquidity and to offer powerful trading features to institutional and retail investors.

Serum is asset agnostic: It provides developers with full control and flexibility to build trading applications that leverage Serum’s liquidity and ecosystem benefits. 

But now that the opprobrium has been cast on FTX, anything related to the exchange and its founder has been contaminated. The revelation that withdrawals of money, amounting to hundreds of millions of dollars in cryptocurrency, were illicitly made on FTX after its bankruptcy filing, brought Serum and Solana into disrepute by association. Investors wonder whether the protocol may be affected as well.

Big BoostSolana was considered, until recently, to be one of the cryptocurrencies with a promising future. But the question now is to know how far SOL will continue to sink. Over the past seven days, the token’s prices have lost 23% of their value against a drop of only 2% for Bitcoin (BTC), the largest cryptocurrency by market value.

Sol, however, has just received huge support. That of Vitalik Buterin, one of the co-founders of Ethereum, the most powerful platform in the crypto sphere.

“Some smart people tell me there is an earnest smart developer community in Solana, and now that the awful opportunistic money people have been washed out, the chain has a bright future,” Buterin wrote on Twitter on December 29.

He added that: “Hard for me to tell from outside, but I hope the community gets its fair chance to thrive.”

It is difficult to know if this support will help SOL to recover, so many uncertainties surround the bankruptcy of FTX to which the token is linked.