Category: Alameda Research

How FTX built a house of cards

This post is by Om Malik from On my Om

A few months ago, news broke of an insider trading ring at Coinbase, one of the many crypto exchanges hoping to make the world of magical Internet money easy for normals. SEC and other authorities acted swiftly and nailed down the perpetrators; their ill-gotten gains were around million-and-a-half dollars. The accused awaits sentencing. The swift action, in that case, is in sharp contrast to the largest cryptocurrency failure at FTX. 

The founder of the bankrupt exchange, and the man at the heart of this multi-billion dollar scandal, Sam Bankman-Fried, is instead invited to the U.S. Congress for “hearings.” 

Instead of being behind bars in custody, SBF is giving interviews to publications like Vox and The New York Times. Both these articles are a disgrace because both publications failed to ask the only question that mattered. Instead, they allowed SBF to come up with justifications, reasons, and bullshit excuses. Others are giving legitimate coverage to the likes of FTX’s house shrink and letting him make outrageous statements such as that he doesn’t see SBF knowingly committing the crime. “I just can’t see him doing that, honestly,” Lerner is quoted. If I were a house shrink getting paid outrageous money, I wouldn’t see anything wrong with the man either. 

Instead of waiting for the bankruptcy filings and being armed with more details, The New York Times interviewed SBF for a fluff piece. It only undermines my confidence in the Times’ coverage of this part of the finance sector. 

These stories are (Read more...)

Visualized: FTX’s Leaked Balance Sheet

This post is by Niccolo Conte from Visual Capitalist

Visualization of FTX Balance Sheet

Visualizing FTX’s Balance Sheet Before Bankruptcy

In a difficult year for the crypto space that has been full of hacks, failing funds, and decentralized stablecoins going to zero, nothing has compared to FTX and Sam Bankman-Fried’s (SBF) rapid implosion.

After an astronomical rise in the crypto space over the past three years, crypto exchange FTX and its founder and CEO SBF have come crashing back down to earth, largely unraveled by their misuse of customer funds and illicit relationship with trading firm Alameda Research.

This graphic visualizes FTX’s leaked balance sheet dated to November 10th, and published by the Financial Times on November 12th. Spreadsheet shows nearly $9 billion in liabilities and not nearly enough illiquid cryptocurrency assets to cover the hole.

How did FTX wind up in this position?

How FTX’s Bankruptcy Unfolded

FTX’s eventual bankruptcy was sparked by a report on November 2nd by CoinDesk citing Alameda Research’s balance sheet. The article reported Alameda’s assets to be $14.6 billion, including $3.66 billion worth of unlocked FTT and $2.16 billion of FTT collateral.

With more than one-third of Alameda’s assets tied up in FTX’s exchange token FTT (including loans backed by the token), eyebrows were raised among the crypto community.

Four days later on November 6th, Alameda Research’s CEO, Caroline Ellison, and Sam Bankman-Fried addressed the CoinDesk story as unfounded rumors. However, on the same day, Binance CEO Changpeng Zhao (CZ) announced that Binance had decided to liquidate all remaining FTT on their books, kicking off a -7.6% decline (Read more...)