FTX and Alameda likely colluded from the very beginning: Report


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according to a new report It was published According to blockchain analytics firm Nansen on Nov. 17, the bankrupt cryptocurrency exchange FTX was said to have been entwined with the exchange of crypto trading firm Alameda Research from the beginning. Both entities were created by cryptocurrency businessman Sam Bankman Freed.

Based on available on-chain evidence, Nansen identified a series of wallets placing Alameda as one of FTX’s early liquidity providers in May 2019. Of his initial 350 million native token FTT supply, 27 million is said to have gone into his FTX deposits on Alameda. Wallet, while the two companies together control 86% of the supply. This setup means that FTT has little circulation on the public market, making the token highly susceptible to price manipulation.

Fast forward to the 2021 bull market when the FTT token rose from the seed price of $0.10 to $84. Nansen said he believed the two companies would not be able to liquidate their huge positions without seriously disrupting the market and would likely take out loans against their FTT positions.

The blockchain analytics firm then noted that about $1.6 billion worth of FTT was exchanged between Alameda Research and troubled brokerage firm Genesis Trading in September 2021. You bid the price, resulting in more leverage.

The report continues that things seemed to work fine until the June 2022 crypto crash. With the collapse of Centralized Finance (CeFi) such as Genesis, Three Arrows, his Capital and Celsius, Alameda may have faced a liquidity crisis. This could not be resolved without selling FTT tokens for cash. However, this would not have been possible without crashing prices and causing an epidemic on the FTX exchange.

On-chain then showed that over $4 billion in FTT tokens had been sent from Alameda to FTX, suggesting a loan of the same amount could be issued. Some raise the possibility that FTX will move customer deposits as a basis for an emergency liquidity injection into Alameda.

In any case, the issue finally came to light when Changpeng Zhao, CEO of cryptocurrency exchange Binance, decided to liquidate his remaining investment in FTX, which consists of FTT. The move spooked investors and at the same time he sparked both a bank run on the FTX exchange and intense selling pressure on his FTT. Soon, the user realized that the funds he promised FTX simply did not exist, leading to the beginning of the demise of what used to be the world’s third largest cryptocurrency exchange.