Fun

Analysis of FTX and Alameda Collapse Points to Terra LUNA Fallout Starting the Domino Effect

News Feed - 2022-11-19 02:11:51

Analysis of FTX and Alameda Collapse Points to Terra LUNA Fallout Starting the Domino Effect


An analysis of the FTX and Alameda Research collapse has been published by the blockchain and crypto analytics firm Nansen and the report notes that the Terra stablecoin collapse, and the liquidity crunch that ensued, likely started the domino effect that led to the company’s implosion. The study from Nansen further details that “FTX and Alameda have had close ties since the very beginning.” Report Shows Terra LUNA Collapse and Intermingled Relationships May Have Initiated FTX’s and Alameda’s Demise


On Nov. 17, 2022, five researchers from the Nansen team published a blockchain analysis and comprehensive look at the “The Collapse of Alameda and FTX.” The report notes that FTX and Alameda had “close ties,” and blockchain records confirm this fact. FTX’s and Alameda’s rise to the top started with the FTT token launch and the “two of them shared the majority of the total FTT supply which did not really enter into circulation,” Nansen researchers detailed.


FTX and FTT’s meteoric scaling led to Alameda’s swelling balance sheet which “was likely used as collateral by Alameda to borrow against.” Nansen researchers detail that if the borrowed funds were leveraged to make illiquid investments, then “FTT would become a central weakness for Alameda.” Nansen researchers say weaknesses began to show when Terra’s once-stable coin UST depegged and caused a massive liquidity crunch. This led to the collapse of crypto hedge fund Three Arrows Capital (3AC) and crypto lender Celsius.



While it’s not associated with Nansen’s report, 3AC co-founder Kyle Davies said in a recent interview that both FTX and Alameda Research “colluded to trade against clients.” Davies implied that FTX and Alameda were stop hunting his crypto hedge fund. After the contagion effect from Celsius and 3AC, Nansen’s report says “Alameda would have needed liquidity from a source that would still be willing to give out a loan against their existing collateral.”


Nansen details that Alameda transferred $3 billion worth of FTT on the FTX exchange and most of those funds remained on FTX until the collapse. “Evidence of the actual loan from FTX to Alameda is not directly visible on-chain, possibly due to the inherent nature of CEXs which may have obfuscated clear [onchain] traces,” Nansen researchers admit. However, outflows and a Bankman-Fried Reuters interview suggest to Nansen researchers that FTT collateral may have been used to secure loans.


“Based on the data, the total $4b FTT outflows from Alameda to FTX in June and July could possibly have been the provision of parts of the collateral that was used to secure the loans (worth at least $4b) in May / June that was revealed by several people close to Bankman-Fried in a Reuters interview,” Nansen’s study discloses. The report concludes that the Coindesk balance sheet report “exposed concerns regarding Alameda’s balance sheet” which finally led to the “back-and-forth battle between the CEOs of Binance and FTX.”


“[The incidents] caused a ripple effect on market participants, Binance owned a large FTT position,” Nansen researchers noted. “From this point on, the intermingled relationship between Alameda and FTX became more troubling, given that customer funds were also in the equation. Alameda was at the stage where survival was its chosen priority, and if one entity collapses, more trouble could start brewing for FTX.” The report concludes: Given how intertwined these entities were set up to operate, along with the over-leverage of collateral, our post-mortem [onchain] analysis hints that the eventual collapse of Alameda (and the resulting impact on FTX) was, perhaps, inevitable.


You can read Nansen’s FTX and Alameda report in its entirety here. Tags in this story 3AC, Alameda Research, Alameda trading, blockchain records, FTT, FTT Token, FTT token collapse, FTX collapse, FTX Demise, FTX Exchange, intertwined, LUNA, Nansen, Nansen FTX, Nansen Research, Nansen Researchers, Nansen Study, over-leverage of collateral, Terra collapse, Terra UST, Three Arrows Capital


What do you think about Nansen’s comprehensive report concerning the collapse of Alameda and FTX? Let us know what you think about this subject in the comments section below. Jamie Redman


Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today. FTX Execs Gave $70 Million to Both Democrats and Republicans Heading Into the 2022 US Midterms NEWS | 1 hour ago Co-Founder of Russia’s Largest Crypto Pyramid Finiko Arrested in UAE NEWS | 10 hours ago


Image Credits: Shutterstock, Pixabay, Wiki Commons, Editorial photo credit: Nansen Research, Maurice NORBERT / Shutterstock.com Previous articleBiggest Movers: LTC Rallies to 1-Week High, as UNI Snaps Recent Losses Next articleEverEarn Ethereum Blockchain Public Presale With USDC Rewards Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article. Read disclaimerShow comments More Popular NewsIn Case You Missed ItTony Hawk"s Latest NFTs to Come With Signed Physical Skateboards


Last December, the renowned professional skateboarder Tony Hawk released his “Last Trick” non-fungible token (NFT) collection via the NFT marketplace Autograph. Next week, Hawk will be auctioning the skateboards he used during his last tricks, and each of the NFTs ... read more.SEC Risks Violating Admin Procedure Act by Rejecting Spot Bitcoin ETFs, Says Grayscale UAE Airliner Emirates to Launch NFTs and Experiences in the Metaverse Interest in Real Estate Investments in Spain Grew 400%, With Some Using Crypto and Stocks as Payment Method Terra"s Algorithmic Dollar-Pegged Crypto UST Is Now the Third-Largest Stablecoin

News Feed

Crypto Analyst Predicts When Dogecoin Price Will Hit $3 This Cycle
Este artículo también está disponible en español. Dogecoin has cleared the $0.4 mark againafter a few days of interesting price inflows that have caused its price to rebo
Chainlink Price Continues To Struggle Below $15 — Levels To Watch
Reason to trust Strict editorial policy that focuses on accuracy, relevance, and impartiality Created by industry experts and meticulously reviewed The highest standards in reporting and pu
Bitcoin price downside may last 2 months — Analysis
Zoltan Vardai11 hours agoBitcoin price downside may last 2 months — AnalysisBitcoin could experience another two months of downside pressure before a bullish chart pattern could lead to a breakout.7605 Total views9 Tot
Biggest Movers: AVAX and ATOM Over 10% Lower on Thursday
Biggest Movers: AVAX and ATOM Over 10% Lower on Thursday AVAX was one of the biggest movers in crypto markets on Thursday, as prices fell by over 10%, hitting a two-week low in the
Paypal to Expand Its Crypto Services Offering to the UK
Paypal to Expand Its Crypto Services Offering to the UK Paypal’s cryptocurrency services are coming to the United Kingdom, as the digital payments giant is
Securitize raises $47M in strategic funding led by BlackRock
Derek Andersen5 hours agoSecuritize raises $47M in strategic funding led by BlackRockCrypto firms Aptos Labs, Paxos and Circle also took part in the funding that bodes well for the future of real-world asset tokenization
Liquidator of Defunct South African Crypto Exchange Says He Found a 54 BTC Discrepancy in Ice3’s Accounts
Liquidator of Defunct South African Crypto Exchange Says He Found a 54 BTC Discrepancy in Ice3"s Accounts A court-appointed liquidator, Dewald Breytenbach of National Liquidators,
Canada’s Blockchain Sector Wants Legal Clarity, New Report Shows
Canadian blockchain companies want to know where their government stands on the crypto space, a new report commissioned by the Canadian Digital Chamber of Commerce (CDCC) shows. The
How to generate passive income with cryptocurrency airdrops
Tobias Vilkenson43 minutes agoHow to generate passive income with cryptocurrency airdropsHunting for crypto airdrop opportunities and cashing in on airdrop rewards can be a thrilling way to bag some extra coins, but bewa
USDC Stablecoin Depegging Causes Concern Among Crypto Advocates, 5 Other Stablecoins Slip Below Parity
USDC Stablecoin Depegging Causes Concern Among Crypto Advocates, 5 Other Stablecoins Slip Below Parity On Saturday, March 11, 2023, crypto advocates are concerned as a few stableco
Regulatory Arm of UAE Financial Centre Releases Defi Discussion Paper
Regulatory Arm of UAE Financial Centre Releases Defi Discussion Paper The regulatory arm of UAE’s financial centre, Abu Dhabi Global Market (ADGM), has released a discussion
Ukraine Central Bank Limits Cash Withdrawals Amid Russian Assault
Ukraine Central Bank Limits Cash Withdrawals Amid Russian Assault The central bank of Ukraine has capped withdrawals of cash in national fiat and banned those in foreign currency.