Sam Bankman-Frieds Hedgefonds suffered a big blow to support the FTX exchange

The Hedge Gunde Alameda Research entered to protect FTX from a loss of up to $ 1 billion after a customer business on the crypto platform exploded last year, and emphasized the deep and long-term connections between Sam Bankman-Fried's digital asset companies.

Alameda took over FTX at the beginning of 2021 when a customer's prayed bet on an obscure token tore through buffer that should protect the stock exchange from losses when a trade goes wrong, the persons familiar with the matter.

The incident, which has not been reported so far, shows how Bankman-Fried, when a pillar of Bankman-Fried's crypto conglomerate, was under stress, the weight on another shift and the companies that were publicly presented as separated as if they were a group.

It also shows how the connections between Bankman-Fried's own trade company and its FTX crypto exchange looked as a ballast long before this year before this year's turbulence on the market for digital assets when Alameda himself was saved with billions of dollars of FTX loans than its other lenders withdrawn.

The close relationship between FTX and Alameda, which is emphasized by these mutual rescue actions, is in the heart of a corporate catastrophe that may have pulled millions of creditors out of their pockets, a company that once had a value of $ 32 billion, and also triggered several investigations around the world. once.

ftx awarded dealers so that they could complete large bets on crypto with just a small initial effort, known as a trade in margin. When the dealers made losses, FTX automatically sold the cash or the margin that they had provided, protecting the stock exchange.

Bankman-Fried had advertised the “unique” liquidation machine from FTX, which in his opinion was a safer method for stock exchanges for risk management. The 30-year-old had pushed the legislators in the United States to take over the FTX system and possibly open it to non-cryptoma markets.

The system included a failure protection: there were large trade groups an incentive to adopt trades in which the initial margin was almost wiped out. But with the most risky, the least traded token, only Alameda was ready to serve as the last line of defense.

In April 2021, the price of a crypto token called MobileCoin-which is used for payments in the Messaging app signal based on data protection-suddenly rose from about $ 6 to almost $ 70 before it crashed almost as quickly.

The wild movements came after a dealer built an unusually large position in the little -known token on FTX. Two people familiar with the matter said that the dealer used the position to borrow FTX, when the price rose, possibly a plan to extract dollars from the stock exchange.

Alameda was forced to intervene and take over the position of the dealer to protect FTX. The loss of the trading company in this business was at least hundreds of millions of dollars, said people, and according to one of the people up to $ 1 billion, which ruined a large part of Alameda's trading profits in 2021.

The role of the trading group as a baking stop for FTX in bad trades was reversed about a year later when Alameda had problems with borrowing from crypto loans.

In June, the crypto sector suffered a cascading credit crisis that was triggered by the collapse of the Stablecoin Terrausd.

When other lenders retired, FTX jumped in to lend Alameda billions of dollars and let the stock exchange dangerously exposed to the trading company, as can be seen from a letter from Bankman-Fried to former employees and an annual financial statements.

In the letter, Bankman-Fried said that Alameda's liabilities rose to FTX by billions of dollars last spring, since "the majority of the loans in the [Crypto] Industry [what] dried out immediately".

An Alameda Finance Report that Bankman-Fried created together with the letter puts the overall liabilities of the trading group compared to FTX at $ 10 billion than his companies went bankrupt.

The analysis of blockchain transactions by the research company Nansen provides additional evidence that FTX acted as a lender of the last instance for Alameda.

Alameda held a large inventory of FTT, a crypto token spent by FTX itself, which it had used as security for loans. Nansen's analysis shows great FTS transfers from several crypto loans in June, which seems to be the return of collateral than Alameda lenders withdrawn.

From mid-June to July, the Nansen analysis FTT in the amount of USD 4 billion, which was transferred from Alameda to FTX, which, according to analysts, could "have been the provision of parts of the collateral that were used to ensure loans".

The strong lending of FTX to Alameda and its dependence on the stock exchange of own FTT token proved to be fatal weakness for Bankman-Fried's empire. At the beginning of November, a report by the crypto news website Coindesk revealed the large FTT position in Alameda's balance sheet, which caused the competing Stock Exchange Binance to announce plans for the sale of the token worth around $ 600 million, which increased the price of the token.

At the same time, concerns about the financial health of the company caused the FTX customers to rush from the stock exchange for the exit and deposits in billions in billions.

The crisis around the stock exchange pressed the price of FTT and two other tokens with narrow connections to Bankman-Fried, Solana and Serum, deleted $ 9.5 billion from Alameda's balance sheet and forced the two companies into bankruptcy.