FTX, one of the largest cryptocurrency exchanges in the world, found itself at the center of a financial scandal that shocked the market. Several days before its collapse, unusual transactions worth billions of dollars were recorded. What were these transactions and how did they impact the FTX crash?
Experts from the analytics firm Nansen point to transactions between FTX and Alameda Research that took place just before the exchange’s collapse. One of the most controversial was a transfer worth $4.1 billion in FTT tokens, a cryptocurrency created by FTX, between the two firms.
Sam Bankman-Fried, the founder of both FTX and Alameda Research, is currently in court, accused of several offenses related to the exchange’s collapse. FTX’s collapse originated from reports indicating that Alameda held a significant 40% stake in FTT tokens in its assets worth $14.6 billion.
Nansen analysts highlight ambiguous interactions between FTX and Alameda prior to these reports. Between September 28 and November 1, Alameda sent FTT tokens valued at $4.1 billion to FTX. Additionally, several transfers of stablecoins tied to the dollar were observed, totaling $388 million.
Blockchain data also indicates that FTX held about 280 million FTT tokens, representing 80% of the total availability of these tokens. Most of them were locked in a three-year contract, with the sole beneficiary being an electronic wallet controlled by Alameda.
Nansen’s analysis suggests that both firms controlled approximately 90% of FTT token availability, allowing them to mutually support their balances. Furthermore, it indicates that Alameda likely sold FTT tokens off-exchange and as collateral for loans from cryptocurrency lending firms.
According to Nansen, the collapse of the Terra ecosystem and the bankruptcy of Three Arrows Capital likely caused liquidity issues for Alameda due to the drop in FTT’s value. This led to a mysterious loan based on FTT tokens worth $4 billion granted by FTX.
Intricate transaction networks, huge sums of money, and big names in the cryptocurrency industry – this whole story shows how complex and unpredictable the world of digital currencies can be. With further investigations, the cryptocurrency market will have to face questions about transparency, integrity, and accountability.
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