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Alameda’s insider edge: Did SBF’s trading firm profit from buying tokens before their listing on FTX?

By Alara Jordan

Edited by Charlie Mellor

12:14, 15 November 2022

A smartphone shows the FTX in front of the Alameda Research name on a computer screen
Ties between Alameda and FTX’s close allegiance have come under scrutiny – Photo: Shutterstock

The epic fall of Sam Bankman-Fried’s cryptocurrency exchange FTX has rocked the crypto industry and has cost customers millions of dollars in lost crypto deposits.

While new allegations and claims continue to be exposed, Alameda Research – a quantitative trading firm founded by Bankman-Fried in 2017 – now faces new claims as to whether it conducted manipulative trading activities and profited from buying tokens before they were listed on FTX.

According to the Wall Street Journal, research conducted by blockchain analytics firm Argus alleges Alameda Research used prior knowledge of tokens that were set to be listed on FTX to purchase them ahead of the public announcements.

Omar Amjad, co-founder of Argus, told the WSJ: “What we see is they’ve basically almost always in the month leading up to it bought into a position that they previously didn’t.

“It’s quite clear there's something in the market telling them they should be buying things they previously hadn’t.”

Despite approaching FTX, there was no immediate response to our request for a comment about the allegations. 

FTT to USD

DOGE/USD

0.13 Price
+6.610% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.0012872

BTC/USD

66,712.30 Price
-0.480% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00

XRP/USD

0.60 Price
+3.010% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.01168

ETH/USD

3,502.27 Price
-0.190% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 6.00

Allegations between Alameda and FTX’s close allegiance are already under scrutiny, with claims financial documents show that Alameda had been dependent on being able to borrow customer assets and funds from FTX.

A further financial report showed that around $5bn of Alameda Research’s balance sheet was held in ftx token (FTT), the utility token of the FTX ecosystem. 

While both Alameda Research and FTX were owned by Sam Bankman-Fried – also known as SBF – he had previously stated that the two entities remained separate.

Following the implosion of FTX and the downfall of SBF, the crypto exchange and more than 130 of its subsidiaries filed for Chapter 11 bankruptcy filings on 11 November.

Bankman-Fried resigned as CEO of the FTX, with newly-appointed John Ray III set to oversee the Chapter 11 bankruptcy procedure.

Ray said in a statement published on Twitter that he will “continue to make every effort to secure all assets, wherever located”.

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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