Alameda FTT holdings: Did SBF’s trading firm hold own token as collateral?
09:45, 9 November 2022
Up until very recently, Sam Bankman-Fried (SBF) reigned over a cryptocurrency empire consisting of one of the world’s biggest crypto exchanges FTX and the trading firm Alameda Research.
But the empire is now falling apart in front of market watchers’ eyes. And it was the extent of the interconnected financials between the two crypto firms, revealed last week, that sparked one of the most astonishing stories in the sector.
A leaked balance sheet of Alameda Research showed that billions of its collateral is denominated in FTX’s native coin, the ftx token (FTT), sparking investor concerns, a bank run, and ultimately FTX agreeing to a takeover by a rival.
FTX token (FTT) to US dollar
Leak revealed FTT dominated balance sheet
Alameda’s finances, according to CoinDesk, revealed that billions of the company’s balance sheet is denominated in FTT – including $3.66bn in ‘unlocked FTT’.
The figures became the subject of scrutiny with commentators raising a number red flags.
Dylan LeClair pointed out that the amount of Alameda’s FTT holding is higher than the token’s whole market capitalisation. He added:
“The total market cap of FTT is $3.35bn, and the fully diluted market cap is $8.8bn. You couldn’t sell $1m of this thing without pushing the market significantly lower.”
WOW
— Dylan LeClair ???? (@DylanLeClair_) November 2, 2022
Per CoinDesk, Alameda research has $14.6 billion of assets, against $8b of liabilities.
For assets: $3.66b FTT, $2.16b “FTT collateral”, $3.37b crypto ($292m SOL, $863m “locked SOL”), $134m USD & $2b “equity securities.
Most net equity tied in completely illiquid altcoins.
Alameda chief tried to calm investors
During the weekend, Alameda’s CEO, Caroline Ellison, tried to calm down the investors and defended the firm’s financial soundness, saying that the leaked document was for “a subset of our corporate entities.”
She added on Twitter: “We have more than $10bn of assets that aren’t reflected there.
But the reassurance failed to soothe the markets. On Sunday afternoon, Changpeng ‘CZ‘ Zhao, CEO of Binance – FTX’s rival, added fuel to the fire after he tweeted that his company would “liquidate any remaining FTT on our books” in the light of the balance sheet revelations.
Nervous investors started to withdraw funds from FTX in large numbers, and the exchange stopped processing withdrawal requests on Tuesday 8 November. Shortly after, SBF announced FTX agreed to a takeover by rival, Binance.
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