Numerous projects like FTX went under in the world of cryptocurrencies. Prominent cryptocurrency platforms were observed declaring bankruptcy one after another. The biggest fall was undoubtedly SBF’s firm collapse. While many were busy accusing Sam Bankman-Fried (SBF) of fraud and poor management, a new study showed how Terra might have precipitated the SBF’s empire’s precipitous fall.
According to a thorough investigation by the blockchain analytics platform Nansen, Do Kwon’s infamous project Terra may have contributed to the crash of FTX. The study claims that Alameda Research and SBF’s firm were never clearly divided. It should be emphasized that around the moment TerraUSD fell, SBF’s firm’s strategy to keep Alameda alive started to unravel.
The report stated,
“Piecing together the pieces from our on-chain investigation, it was evident that the Luna/Terra collapse revealed a deep flaw between Alameda and FTX’s muddled relationship. There were significant FTT outflows from Alameda to FTX around the Terra-Luna/ 3AC situation.”
FTX And Almeda: The Unbreakable Bond?
Wallets owned by Alameda Research, which was co-founded in 2017, were communicating with wallets that would later come under FTX’s possession before the exchange began operating back in May 2019.
The data, according to the researchers, clearly demonstrates that Alameda was either significantly involved in the construction of the exchange or that there was no evident differentiation between Alameda and SBF’s firm at the time, and possibly even both, despite the comparatively low volume of $160k.
Despite repeated denials that the aforementioned businesses were connected, it was revealed that Alameda had $5 billion worth of FTT on its balance sheet.
According to the Nansen researchers, Alameda may have borrowed from the exchange since it would have had few other options to pay back the recalled loans in the wake of the Terra collapse. On-chain records show that $4 billion in FTT was transferred from Alameda to FTX at about the same time that Terra lost its peg and lost $40 billion.