Nansen, a blockchain analytics firm, has delved into the events leading up to the downfall of FTX, shedding light on the transfer of $4.1 billion worth of FTT tokens between FTX and Alameda Research. The revelation comes as the trial of Sam Bankman-Fried, the former CEO of FTX, began on Tuesday with seven counts of fraud and conspiracy. The odds appear to be against him, as the exchange, once valued at $32 billion, is now bankrupt and struggling to repay creditors.
Triggering Factors for FTX’s Collapse
One of the key triggers of the exchange’s collapse was the initial report indicating that 40% of Alameda Research’s $14.6 billion in assets were held in FTT tokens back in September 2022. Nansen’s analysis, however, reveals questionable on-chain activities between FTX and Alameda even before this information became public.
Between September 28 and November 1, Alameda transferred a substantial $4.1 billion worth of FTT tokens to the exchange and continuous transfers of US dollar-pegged stablecoins totaling $388 million. Blockchain data further shows that it held 280 million FTT tokens, equivalent to 80% of the total FTT supply.
Nansen’s report highlights that most FTT tokens were locked in a three-year contract controlled by Alameda, raising suspicions of mutual support between Alameda and FTX. They collectively held around 90% of the FTT token supply.
Nansen’s findings also indicate that Alameda may have engaged in OTC sales and used FTT tokens as collateral for crypto loans, with significant fund movements between FTX, Alameda, and Genesis Trading wallets, reaching up to $1.7 billion in transactions in December 2021.
The Terra ecosystem’s collapse and Three Arrows Capital’s bankruptcy allegedly led to liquidity issues for Alameda. It’s speculated that Alameda received a covert $4 billion FTT-backed loan from FTX, supported by on-chain data showing a transfer of 163 million FTT tokens worth around $4 billion.
Additionally, Alameda reportedly couldn’t fulfill a purchase offer of FTT tokens from Binance at $22 per token due to concerns about its financial stability, prompting Binance to sell its FTT tokens.
These revelations from Nansen’s report continue to cast a shadow over the events leading to the collapse of the exchange and raise important questions about the nature of the relationship between FTX and Alameda Research. SBF’s ongoing legal battle will provide further insight into these matters.
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