Blockchain data analysts from Nansen have conducted a thorough investigation into the days leading up to the collapse of FTX, shedding light on the intricate relationship between the exchange and Alameda Research. As Sam Bankman-Fried, the former CEO of FTX, faces a range of charges related to the downfall of the exchange, the Nansen report, shared with Cointelegraph, provides unique insights into the intertwined operations of the two companies.
The collapse of FTX is widely attributed to initial reports that revealed Alameda Research held a significant 40% share of its $14.6 billion in assets in FTT tokens in September 2022. Nansen analysts discovered suspicious on-chain interactions between FTX and Alameda prior to the emergence of these reports. Between September 28 and November 1, Alameda transferred $4.1 billion worth of FTT tokens to FTX and initiated numerous transfers of United States dollar-pegged stablecoins totaling $388 million.
On-chain data analysis also unveiled that FTX held approximately 280 million FTT tokens, which accounted for 80% of the total 350 million FTT supply. Extensive FTT trading volume, amounting to billions of dollars, was observed flowing between various FTX and Alameda wallets. Nansen further highlighted that most of the FTT token supply was locked in a three-year vesting contract, with an Alameda-controlled wallet serving as the sole beneficiary.
Given that both companies controlled around 90% of the FTT token supply, Nansen suggests that they were able to support each other’s balance sheets. The report also posits that Alameda likely sold FTT tokens over-the-counter and used them as collateral for loans from cryptocurrency lending firms. Historical on-chain data corroborates this theory, as large inflows and outflows between FTX, Alameda, and Genesis Trading wallets, with transfer volumes reaching up to $1.7 billion, were observed in December 2021.
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The collapse of the Terra ecosystem and the subsequent bankruptcy of Three Arrows Capital (3AC) are believed to have caused liquidity issues for Alameda, as the value of FTT plummeted. This led to a clandestine $4 billion FTT-backed loan from FTX. Nansen’s on-chain data indicates that this loan may indeed have taken place, as around mid-June 2022, Alameda sent approximately 163 million FTT tokens, worth approximately $4 billion at that time, to FTX wallets. The researchers point out that this transaction volume aligns with a $4 billion loan figure disclosed by close associates of Bankman-Fried in an interview with Reuters.
Moreover, blockchain data reveals that Alameda would not have been able to fulfill an offer to purchase FTT tokens from Binance at $22 on November 6. This occurred after Binance CEO Changpeng Zhao announced the exchange’s intention to sell off its FTT tokens following negative reports concerning Alameda’s balance sheet.
In conclusion, Nansen’s comprehensive analysis of blockchain data has shed light on the intricate relationship between FTX and Alameda leading up to the collapse of FTX. The report suggests collusion between the two companies in propping up their balance sheets and highlights suspicious on-chain interactions and large-volume transactions. These findings lend further insight into the events surrounding the downfall of FTX and the legal proceedings involving Sam Bankman-Fried.
