Without a doubt, November proved to be the darkest month in the cryptocurrency market. Drama is brewing between Bitcoin (BTC) and altcoins shortly after Binance’s CEO announced that the exchange will ditch the FTX token.
However, the big problem in this story is Alameda Research, the trading firm of Sam Bankman-Fried (SBF). This is because, in early November, there were complaints that Alameda was facing insolvency problems.
Coindesk published a report, shared by Binance, which said that Alameda does not have enough funds to cover its outstanding debts. The SBF trading company has a large part of its funds in illiquid tokens based on the Solana blockchain, and the largest proportion of its assets is concentrated in FTT.
In this scenario, the company will enter the bankruptcy list along with Terraform Labs, Celsius Network and Three Arrows Capital (3AC). This problem will affect FTX, so FTX asked for help from the main crypto exchange Binance, and CEO Changpeng Zhao (CZ) said that it will step in with the help and purchase of the younger exchange.
Shortly after doing due diligence on FTX, Binance created it decision so don’t buy crypto trading platform anymore. However, this is not the only scandal FTX has been involved in. Although SBF wanted to pass the security and report that everything is in order, he had to borrow $ 1 billion in new capital from Wall Street and Silicon Valley billionaires.
The interesting point in this story is that this SBF action happened just hours before FTX filed a distress call with Binance.
Furthermore, the exchange problem cannot be solved with only $1 billion. After all, it takes at least $8 billion to stay alive.
Therefore, the belief that FTX is not experiencing liquidity problems is false. Furthermore, Alameda Research is not as honest as it claims. It will file for bankruptcy long before everything collapses.
Collapse of the SBF ecosystem
Idolized by the cryptocurrency market, SBF managed to attract attention by accumulating a net worth that exceeded the mark of $16 billion.
FTX, the flagship company so far, has been leading the crypto industry for quite some time. SBF is even proud to say that it can surpass the turnover of Coinbase, even with fewer customers and being a newcomer to the industry.
“We have very good numbers. We trade 6 times more volume than Coinbase at the time. We have 20 times less users. If you look at these numbers, you can see a lot of potential.
Despite being involved in controversies related to the launch of the project, SBF can be highlighted in many, and the latest is the APT token.
Of course, we cannot fail to mention that FTX made a million-dollar rescue from BlockFi, and SBF held a big offer for Voyager Capital assets shortly after the collapse of the Terra ecosystem (LUNA). This action certainly helped boost FTX’s image as a solvent company. This is not without reason. FTX won a dispute with Binance itself for Voyager assets.
But not everything is as smooth as it seems
Something is not quite right at Alameda Research. For example, Sam Trabucco decided to step down as CEO of the platform at the end of August.
As the decision seemed quite random at the time, some corner of the market no longer paid attention to.
Not long ago, former FTX president Brett Harrison decided it was time to leave office – another big warning sign. After all, why would two great executives leave such a great company? That sounds even suspicious.
After the exit, the SEC pressure drops on FTX. The Texas Securities Regulator launched an investigation into FTX and SBF.
As the executive director of the Texas State Securities Board Joe Rotunda reported in October, the FTX account offers investors income in exchange for depositing cryptocurrencies with the company they are investigating.
Bankruptcy of Alameda Research
All these facts have shown that something is wrong, but the real Alameda bankruptcy will come before that.
According to a tweet shared by Lucas Nuzzi, Head of R&D at CoinMetrics, the trading company is going bankrupt in the second quarter of 2022. Nuzzi told everyone that Alameda can only survive because FTX is reportedly funding them. The Coinmetrics researcher said on his Twitter profile that the hoax ended 40 days ago, when 173 million FTTs, worth $4 billion, suddenly became active on the chain.
The same day, $8 billion FTT was moved on the chain. This is the biggest daily move for FTX token.
But this is not the end of the story. Nuzzi discovered a transaction related to the FTT token ICO contract in 2019. According to researchers, the only recipient of $4 billion is Alameda Research.
In Nuzzi’s conception, the bankruptcy of Alameda came together with Three Arrows Capital – that is, in the second quarter of this year.
Without a doubt, FTX decided to protect the trading company from becoming worse for FTT.
If in May Alameda has passed away, the FTT ICO contract will be implemented and a large sale will be issued for all the tokens purchased in September.
Understand, now we know that when FTX says it helps Voyager Digital Kabreally committed to saving Alameda.
FTX can bring another negative impact to cryptocurrencies
Bitcoin and altcoins were greatly affected by the Big Money resolution between Binance and FTX.
What was already bad due to macroeconomic pressures is made worse by the chaotic scene among major cryptocurrency trading companies.
In fact, FUD has strengthen among FTX investors, who now express concern about the amount invested.
Venture investors, on the other hand, fear that their investment will be wasted.
Additionally, the FTX-backed lending company BlockFi declare it will close the withdrawal of a customer.
Genesis Block, also affected by the FTX drama, will stop trading and close its website on December 10.
But this does not mean that these projects are the only ones affected by the fall of the old market giant. Solana is one altcoin that proves this.
Without a doubt, November 8, 2022, will go down in the history of the crypto market as the craziest in existence.