FTX and Alameda Research collapse analysis A report published by chain and cryptocurrency analytics firm Nansen says the collapse of Terra’s stablecoin and subsequent liquidity crisis likely triggered the domino effect that led to the company’s implosion. doing. Nansen’s research details that “FTX and Alameda have had a close relationship from the beginning.”
Reports indicate Terra LUNA collapse and mixed ties may have caused the demise of FTX and Alameda
November 2022 17 On the same day, five researchers from the Nansen team published a blockchain analysis and comprehensive research on “Alameda and the FTX Collapse”. The report notes that FTX and Alameda had a “close relationship,” and blockchain records corroborate this fact.FTX and Alameda’s rise to the top began with the launch of the FTT token. , “The two companies shared most of the total supply of FTT that never actually made it into circulation,” Nansen researchers detailed.
The rapid scaling of FTX and FTT swelled Alameda’s balance sheet, which it “likely used as collateral to borrow from Alameda.” The Nansen researchers detailed that “FTT would be a core weakness for Alameda” if borrowed funds were used for illiquid investments. Nansen researchers say weakness began to emerge when Terra’s once-stable coin UST was depegged, causing a massive liquidity crunch. This led to the bankruptcy of crypto hedge fund Three Arrows Capital (3AC) and crypto lender Celsius.
Unrelated to Nansen’s report, 3AC co-founder Kyle Davies said in a recent interview that both FTX and Alameda Research are “clients.” and conspired to make a deal against Davies has hinted that FTX and Alameda havestopped looking for his cryptocurrency hedge fund. After the spillover from Celsius and his 3AC, Nansen’s report states that “Alameda would have needed liquidity from sources willing to provide loans against existing collateral.” increase.
Nansen details that Alameda transferred his $3 billion worth of his FTT on his FTX exchange and most of those funds remained on FTX until the collapse. doing. “Evidence of an actual loan from FTX to Alameda is probably not directly visible on-chain due to the inherent nature of CEX, which may have obfuscated any clear [on-chain] traces,” Nansen said. researchers admit. However, the leak and his Bankman-Fried Reuters interview suggest to Nansen researchers that FTT collateral may have been used to secure loans.
“Based on data, FTT outflows totaling $4 billion from Alameda to FTX in June and July were part of the collateral offerings used to secure the loans. (Worth at least $4 billion.) In May or June, according to several people close to Bankman-Fried in interviews with Reuters, the Nansen investigation reveals. The report concludes that Coindesk’s balance sheet report “revealed concerns about Alameda’s balance sheet” and ultimately “Binance and his CEO of FTX It led to a back-and-forth battle between
“[The incident] had a ripple effect on market participants, with Binance holding large FTT positions,” Nansen researchers said. I’m here. “From this point on, the complex relationship between Alameda and FTX became more troubling given that customer funds were also in the equation. If one entity collapses, it could cause more problems for FTX.” The report concludes:
How intertwined these organizations operate. , given the collateral’s over-leverage, our post-mortem [on-chain] analysis suggests that Alameda’s eventual collapse (and resulting impact on FTX) was likely inevitable.
You can read Nansen’s full FTX and Alameda report here.
Image Credits: Shutterstock, Pixabay, Wiki Commons; Editorial Photo Credits: Nansen Research, Maurice NORBERT / Shutterstock.com