The Alameda-ftx death spiral | Finance times
The Alameda-ftx death spiral | Finance times
crypto has many problems. But the transparency of on-chain transactions occasionally offers some rather fascinating insights into gimmicks such as the fall of Sam Bankman-Fried's magical bean empire.
The blockchain analytics company Nansen dealt with the incestuous connections between the Alameda trade company from SBF and the crypto exchange FTX and its subsequent mutual death spiral. The report has now been published and offers an interesting reading.
Although SBF often insists that they were operated independently, Nansen shows what everyoneever allows and are now obvious. From the beginning they were closely connected and remained during their short life. Before FTX was officially introduced in May 2019, Alameda's Wallet had started to interact on a large scale.
© nansen
The connections only deepened and became even more problematic when FTX introduced his utility token Ftt and Alameda was an immediately important counterparty.
nansen estimates that a total of 280 million of FTX were checked of the 350 million FTT and around 27 million landed in Alameda's wallet (interestingly, Nansen says that 10.7 million FTT is not taken into account and 10 million ftt are unaffected). address 0x4aa ).
This means that very few tokens from FTX were actually traded in the wild, but both companies could use the theoretical value of their FTT pins as security to achieve a leverage.
Alameda and FTX had the vast majority of the entire FTT offer from the start, which means:
- The actual circulation (and the liquidity depth) is low compared to the overall offer (i.e. low float)
prices can be easily influenced to rise with relatively small amounts compared to the resulting increase (or reduction) of the evaluation up (or down)
-Since both Alameda and FTX kept the majority of the FTT offer, the other company could suffer an enormous damage to his balance sheet, if it is forced to sell its FTT stocks
The Nansen report then examines how Alameda, FTX and their control over FTT have contributed to driving each other in crypto summer 2021:
a massively levered long cryptocurrency based on dodgy collateral was obviously not a great idea in the crypto winter 2022.
nansen assumes that Alameda had serious problems for the first time in May when the vortex to collapse the crypto-quasi-bank Celsius, the crypto hedge fund 3ac and the stable coin ecosystem of Terra/Luna and was triggered by the breakdown.
on-chain data does not conclusively prove that FTX Alameda around this time for the first time a loan of 4 mrd -juli, with the peak deposits, imploded as 3ac in mid-June.
Several other "mysterious" transfers from FTX to Alameda were found, such as this transfer of 155,000 Ethereum ($ 323 million) on May 12, the Alameda then to Genesis, a crypto rental platform, transferred.
At the end of October, an "unusual list of continuous stablecoin transfers from FTX International and FTX Us to Alamedas Circle, Binance and FTX Wallet was discovered".
Together, the transfers amounted to stable coins with a total value of $ 388 million from October 31 to November 1. Not great.
On November 2, Coindesk journalist Ian Allison published the report, which revealed that $ 5.8 billion of Alameda's assets of $ 14.6 billion in FTT, the death spiral began and the rest is.
nansen emphasized some "unusually" large withdrawals from FTX in the 24 hours before it was forced to freeze, in particular a mammoth-neto cancellation of $ 245 million by "ETH millionaire". But the most important conclusion of the company was that the collapse of Alameda/FTX was probably inevitable.
When we put together the parts of our on-chain examination, it was obvious that the collapse of Luna/Terra revealed a deep mistake between Alamedas and FTX's confused relationship. There were considerable FTT emissions from Alameda to FTX around the Terra-Luna/3AC situation. Based on the data, the total FTT drainage of $ 4 billion from Alameda to FTX in June and July could have been the provision of collateral that were used to secure the loans (worth at least 4 billion USD) in May / June that were uncovered by several people near Bankman-Fried in a reuters interview.
We also observed somewhat unusually large continuous drains from StableCoin token from FTX in Alamedas Wallets during this period. In view of the cascading effect of the collapse of Luna, many companies such as 3AC were liquidated, which led to an infection of the crypto loan market. While our on-chain examination did not directly confirm that user funds were redirected from FTX to Alameda to "save" them before the liquidation, the unusually large FTT inflows from FTX according to Luna/3ac indicate a plausible case.
From this point on, the intertwined relationship between Alameda and FTX was increasingly worrying, since customer funds also included in the equation. Alameda was in a stage where survival was his chosen priority, and if a unit breaks down, other problems for FTX could collapse. In view of the interweaving of these units and the excessive leverage of collateral, our postmortal on-chain analysis indicates that the ultimate collapse of Alameda (and the resulting effects on FTX) was perhaps inevitable.
Source: Financial Times
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