Alameda Research Is On The Brink Of Collapse In Q2 Due To A Lot Of FTT As Collateral

November 9, 2022 - Around 2 mins mins to read

There is evidence that FTX may have provided a large-scale bailout to Alameda Research in the second quarter through the heavy use of FTT as collateral, and now this is the reason why it can collapse at any time.

On November 9, CoinMetrics research director Lucas Nuzzi analyzed on Twitter that there is evidence that FTX may have provided a large-scale bailout to Alameda in the second quarter, and now this is the reason for their trouble.

1/ I found evidence that FTX might have provided a massive bailout for Alameda in Q2 which now came back to haunt them.

40 days ago, 173 million FTT tokens worth over 4B USD became active on-chain.

A rabbit hole appeared ???????? pic.twitter.com/DtCyPspME0
— Lucas Nuzzi (@LucasNuzzi) November 8, 2022

According to data analysis, Alameda will likely be the latest name to come to the brink of collapse with Three Arrows Capital and others in the second quarter of this year. It survives using 17.2 million FTTs guaranteed to issue after 4 months as collateral.

Obtained from FTX Funds, once issued, all tokens are returned as a refund. The FTT ICO contract is automatically vetted and if FTX allows Alameda to launch in May, their collapse will ensure that all FTX tokens issued after that in September will be liquidated.

This will be bad for the FTX, so they have to figure out how to avoid it. Alameda and FTX really put all their chances in the balance in the second quarter and used the money to bail out other companies, which solidified FTX’s image as a solvent and responsible organization, and help the price of FTT go up.

7/ The timing makes sense.

Alameda and FTX essentially put all chips on the table in Q2 and used that cash to bail others out.

This solidified FTXs image as a solvent and responsible institution, which helped FTT's price.

So did SBFs political moves.https://t.co/dLGj7gOplk
— Lucas Nuzzi (@LucasNuzzi) November 8, 2022

A bailout for Alameda could weaken FTX’s balance sheet, leaving it solvent-free, which is why Alameda has worked so hard to protect FTT’s price.

Nuzzi also speculated that maybe people at Binance were aware of this arrangement between FTX and Alameda. As large holders of FTT, they may begin to intentionally disrupt this market to force FTX to face a liquidity crunch.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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