{"id":14603,"date":"2022-11-18T17:35:00","date_gmt":"2022-11-18T17:35:00","guid":{"rendered":"https:\/\/crowdfundjunction.com\/blog\/analysis-of-ftx-and-alameda-collapse-points-to-terra-luna-fallout-starting-the-domino-effect-bitcoin-news\/"},"modified":"2022-11-18T17:35:00","modified_gmt":"2022-11-18T17:35:00","slug":"analysis-of-ftx-and-alameda-collapse-points-to-terra-luna-fallout-starting-the-domino-effect-bitcoin-news","status":"publish","type":"post","link":"https:\/\/crowdfundjunction.com\/blog\/analysis-of-ftx-and-alameda-collapse-points-to-terra-luna-fallout-starting-the-domino-effect-bitcoin-news\/","title":{"rendered":"Analysis of FTX and Alameda Collapse Points to Terra LUNA Fallout Starting the Domino Effect \u2013 Bitcoin News"},"content":{"rendered":"

(Originally posted on : Bitcoin News )<\/b>
\n<\/p>\n

\n
\n<\/header>\n
\n<\/div>\n

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\u2019s implosion. The study from Nansen further details that \u201cFTX and Alameda have had close ties since the very beginning.\u201d<\/strong><\/p>\n

Report Shows Terra LUNA Collapse and Intermingled Relationships May Have Initiated FTX\u2019s and Alameda\u2019s Demise<\/h2>\n

On Nov. 17, 2022, five researchers from the Nansen team published a blockchain analysis and comprehensive look at the \u201cThe Collapse of Alameda and FTX.\u201d The report notes that FTX and Alameda had \u201cclose ties,\u201d and blockchain records confirm this fact. FTX\u2019s and Alameda\u2019s rise to the top started with the FTT token launch<\/a> and the \u201ctwo of them shared the majority of the total FTT supply which did not really enter into circulation,\u201d Nansen researchers detailed.<\/p>\n

FTX and FTT\u2019s meteoric scaling led to Alameda\u2019s swelling balance sheet which \u201cwas likely used as collateral by Alameda to borrow against.\u201d Nansen researchers detail that if the borrowed funds were leveraged to make illiquid investments, then \u201cFTT would become a central weakness for Alameda.\u201d Nansen researchers say weaknesses began to show when Terra\u2019s 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.<\/p>\n

\"Analysis<\/p>\n

While it\u2019s not associated with Nansen\u2019s report, 3AC co-founder Kyle Davies said<\/a> in a recent interview that both FTX and Alameda Research \u201ccolluded to trade against clients.\u201d Davies implied that FTX and Alameda were stop hunting<\/a> his crypto hedge fund. After the contagion effect from Celsius and 3AC, Nansen\u2019s report says \u201cAlameda would have needed liquidity from a source that would still be willing to give out a loan against their existing collateral.\u201d<\/p>\n

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. \u201cEvidence 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,\u201d 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.<\/p>\n

\u201cBased 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,\u201d Nansen\u2019s study discloses. The report concludes that the Coindesk balance sheet report<\/a> \u201cexposed concerns regarding Alameda\u2019s balance sheet\u201d which finally led to the \u201cback-and-forth battle between the CEOs of Binance and FTX.\u201d<\/p>\n

\u201c[The incidents] caused a ripple effect on market participants, Binance owned a large FTT position,\u201d Nansen researchers noted. \u201cFrom 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.\u201d The report concludes:<\/p>\n

\n

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.<\/p>\n<\/blockquote>\n

You can read Nansen\u2019s FTX and Alameda report in its entirety here<\/strong><\/a>.<\/p>\n

\n
\nTags in this story
\n<\/h6>\n
3AC<\/a>, Alameda Research<\/a>, Alameda trading<\/a>, blockchain records<\/a>, FTT<\/a>, FTT Token<\/a>, FTT token collapse<\/a>, FTX collapse<\/a>, FTX Demise<\/a>, FTX Exchange<\/a>, intertwined<\/a>, LUNA<\/a>, Nansen<\/a>, Nansen FTX<\/a>, Nansen Research<\/a>, Nansen Researchers<\/a>, Nansen Study<\/a>, over-leverage of collateral<\/a>, Terra collapse<\/a>, Terra UST<\/a>, Three Arrows Capital<\/a><\/div>\n<\/div>\n

What do you think about Nansen\u2019s comprehensive report concerning the collapse of Alameda and FTX? Let us know what you think about this subject in the comments section below.<\/strong><\/em><\/p>\n

\n
\n<\/div>\n
\n
\nJamie Redman <\/h6>\n

\nJamie 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.

\n
\n
\n<\/a>
\n<\/span>\n<\/p>\n<\/div>\n<\/div>\n

Image Credits<\/b>: Shutterstock, Pixabay, Wiki Commons, Editorial photo credit: Nansen Research, Maurice NORBERT \/ Shutterstock.com <\/em><\/p>\n

\n

Disclaimer<\/strong>: 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<\/a> 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.<\/p>\n<\/div>\n

\n