“FTX Might Have Provided Massive Bailout For Alameda In Q2”

This Coin Metrics analyst found the secret to Alameda/FTX. Because let’s face it, it doesn’t make sense. Both of Sam Bankman-Fried’s businesses were extremely profitable. FTX was the world’s third-biggest exchange and growing, why would anyone risk killing that golden goose? The root cause must have been identified. This Coin Metrics analyst might have found it in the onchain data. It’s possible.

The Head of R&D at Coin Metrics, Lucas Nuzzi, ends his thread with a warning: “Important to note that this is my own personal highly-speculative take on what happened based on these on-chain artifacts.” The case the Coin Metrics analyst is making rests on solid on-chain data, but the interpretation of what said data means is “highly-speculative.” So, take it with a grain of salt and don’t go around saying this is exactly what happened, because it might not be. 

However, it is worth noting that the yikes are real! 

This is The Coin Metrics Analysis

Lucas Nuzzi starts with a statement of fact, “I found evidence that FTX might have provided a massive bailout for Alameda in Q2 which now came back to haunt them.” And then, he poses a mystery. “40 days ago, 173 million FTT tokens worth over 4B USD became active on-chain.” Where did those tokens go? Alameda Research was the answer. It was September 28th. That day, FTT was moved at a record $8.6B.

“That was by far the largest daily move of FTT in the token’s existence and one of the largest ERC20 daily moves we ever recorded at Coin Metrics,” Nuzzi tweeted. What were the events around Alameda/FTX at that moment? There was nothing special.

  • Sam Trabucco, Alameda Research’s Co-CEO, resigned on August 24th. “I will stay on as an advisor, but otherwise will not continue to have a strong day-to-day presence at the company,” Trabucco tweeted.
  • On September 27th, Brett Harrison Step downFrom the CEO position at FTX. “Over the next few months I’ll be transferring my responsibilities and moving into an advisory role at the company,” Harrison tweeted.
  • This is the best. This one will be released on September 28th. Sam Bankman-Fried tweeted, “Heads up: rotating a few FTX wallets today (mostly non-circulating); we do this periodically.  Might be a few more coming, won’t have any effect.”

If this all is true, the last SBF Tweet will most likely make it to court.

FTTUSD price chart - TradingView

FTT Price Chart for 11/09/2022 On FTX Source: FTT/USD TradingView.com| Source: FTT/USD on TradingView.com

Alameda’s Money: What did he do with it?

The FTT tokens are derived directly from an original ICO smartcontract. The Coin Metrics analyst “found a peculiar transaction that interacted with a contract from the FTT ICO. This 2019 contract *automatically* released 173 Million FTT from the token’s ICO.” Strange, but both organizations are joined at the hip. It was then that things got wacky. “Alameda then sent that *entire* balance to the address of the deployer (creator) of the FTT ERC20, which is controlled by someone at FTX.”


The Coin Metrics Analyst’s Theory

According to Lucas Nuzzi, Alameda Research wasn’t immune to the crypto contagion that plagued the space in Q2. In fact, the company might’ve blown up with 3AC, Voyager, and Celsius. “It ONLY survived because it was able to secure funding from FTX using as “collateral” the 172M FTT that was guaranteed to vest 4 months later.” That’s an extremely risky move. It almost seems like FTX didn’t have a choice.

They didn’t, because “the FTT ICO contract vests automatically. Had FTX let Alameda implode in May, their collapse would have ensured the subsequent liquidation of all FTT tokens vested in September.” If the scenario the Coin Metrics analyst poses is real, SBF and company had to do it. They paid a high price. “The Alameda bailout likely put a dent on FTXs balance sheet to the point where it was no longer solvent. This would have been fine if the price of FTT didn’t collapse and a bank run ensued.”

CZZ and Binance are here

CZ and Binance were able to find out the details of this deal. The biggest crypto exchange in terms of trading volume also had an extensive FTT package. “As part of Binance’s exit from FTX equity last year, Binance received roughly $2.1 billion USD equivalent in cash (BUSD and FTT),” CZ tweeteHe announced that they would liquidate. Is this a heavy FTT-bag? The Coin Metrics analyst explains, “As large holders of FTT, they could start deliberately tanking that market to force FTX to face a liquidity crunch.”

They did.

They offered to purchase FTX for them and their troubles.

Presumably to save pennies on each dollar.

It is true that this was a masterstroke.

But remember the Coin Metrics’ analyst warning, “Important to note that this is my own personal highly-speculative take on what happened based on these on-chain artifacts.”

Pixabay | Charts by TradingView

Get more Crypto News at CFX Magazine