Crypto crash coming? FTX partner Alameda moves billions

• On-chain data shows that the bankrupt trading platform moved $2.7 million in various tokens to a new wallet yesterday.
• FTX has been under further scrutiny after $650 million worth of tokens left its wallets hours after filing for bankruptcy.

Alameda research has reportedly transferred $2.7 million worth of Uniswap, Serum, and FTX tokens to one of its new crypto wallets. Various on-chain data confirmed the transfer and added that the wallet already has $89 million worth of various crypto assets. On-chain analytics platform, Nansen, was the first to link these wallets with Alameda research.

Currently, the wallet holder has yet to make any move to transfer the funds. However, over the weekend, Sam Bankman-Fried’s crypto trading arm moved $36 million in various tokens to the same wallet. A breakdown of the transferred funds shows that it contains $1 million in Render tokens, $5 million in Sushibar tokens, and $30 million in BitDAO tokens (bit).

Alameda’s $30 million worth of BIT tokens isn’t more than a year old. The BIT tokens are the native tokens of ByBit (a Singapore-headquartered crypto exchange) with backing from top crypto VCs such as Peter Thiel, DragonFly Capital, and Pantera Capital.

Alameda purchased the bit tokens using FTT tokens. But one of their agreements was that neither firm would sell the other’s tokens within three years. So two weeks ago, BitDAO requested proof from Alameda that the trading firm hadn’t reneged on their agreement.

BitDAO made the request following a sudden 20 percent drop in bit’s price. That might explain why Alameda hasn’t sold the bit tokens and has transferred them to another wallet. Bankman-Fried and Tara MacAulay co-founded the Alameda trading firm five years ago.

Two years later, Bankman-Fried founded the FTX exchange. However, he was still active with Alameda research till July last year. Nevertheless, Bankman-Fried has always insisted that there was no link between Alameda research and FTX exchange.

However, a leaked balance sheet revealed that Alameda strongly depended on funds from FTX customers for its trading activities. However, the new Alameda wallet consists primarily of USDT and BIT tokens as of Monday morning. Later the same day, Alameda tried but failed to move $1.7 million in Ethereum to this new wallet.

Multiple reports claim that the transaction wasn’t successful because the firm couldn’t pay the gas fees for the transactions. The Ethereum blockchain charges a fee it calls gas before it processes transactions. The fees are for network validators who are responsible for processing transactions.

The gas fees aren’t fixed as it depends on the network’s congestion or how fast the sender wants the transaction completed.

More intense scrutiny for FTX

FTX had been involved in several on-chain transactions since Friday despite filing for bankruptcy on the same day. Hence, many have wondered how a bankrupt firm can be involved in a $650 million transaction within the same day. However, FTX CEO John Ray, through its general counsel Ryne Miller, tweeted that the company is about to remove trading and withdrawal features from its platform.

2/ Among other things, we are in the process of removing trading and withdrawal functionality and moving as many digital assets as can be identified to a new cold wallet custodian.  As widely reported, unauthorized access to certain assets has occurred.

— Ryne Miller (@_Ryne_Miller) November 12, 2022

Hence, it wants to move all its remaining crypto assets to a fresh cold wallet custodian. The statement also confirmed rumors of unauthorized access to some of its assets. Following that tweet, the Bahamian regulator announced that it didn’t approve FTX to enable withdrawals for Bahamians, contrasting to what the exchange previously claimed on Twitter. FTX’s troubles started after a leaked report revealed that nearly 40 percent of Alameda’s $14 billion balance sheet was held in FTT (FTX’s native token). The leaked balance sheet also revealed that most of the remaining Alameda’s balance sheet was also in illiquid tokens like Serum.

Serum is the native token of another Bankman-Fried-owned firm, a decentralized exchange built on Solana. This discovery was the primary reason Binance opted to sell all its FTT tokens (valued at $580 million then).

The Binance announcement triggered a series of actions, with investors placing withdrawal requests worth billions from the FTX platform within 48 hours. After FTX failed to honor withdrawals, it announced that it had reached an agreement with Binance for its acquisition.

However, Binance withdrew from the deal less than 24 hours later. Then, FTX filed for bankruptcy. So it remains to be seen how Alameda Research’s funds’ transfer will affect the broader crypto market.