Blockchain data analysts at Nansen have delved into the events leading up to the collapse of FTX, particularly focusing on the transfer of $4.1 billion worth of FTT tokens between FTX and Alameda Research, two companies founded by Sam Bankman-Fried.
This analysis comes as the former FTX CEO faces a barrage of charges in relation to the exchange’s downfall.
The demise of FTX was primarily triggered by initial reports highlighting that a substantial 40% chunk of Alameda’s $14.6 billion in assets was held in FTT tokens in September 2022.
However, Nansen’s findings reveal intriguing on-chain interactions between FTX and Alameda before these reports surfaced.
Between September 28 and November 1, Alameda transferred $4.1 billion worth of FTT tokens to FTX, along with numerous transactions involving US dollar-pegged stablecoins totaling $388 million.
Blockchain data further indicated that FTX possessed approximately 280 million FTT tokens, which accounted for 80% of the total FTT supply of 350 million tokens.
The data also revealed substantial FTT trading volume, amounting to billions of dollars, moving between various FTX and Alameda wallets.
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Nansen’s report highlighted that the majority of the FTT token supply, comprising company tokens and unsold non-company tokens, was locked in a three-year vesting contract controlled by an Alameda-owned wallet.
Considering that both companies controlled around 90% of the FTT token supply, Nansen suggests that they may have mutually supported each other’s balance sheets.
The report also proposes that Alameda likely sold FTT tokens over-the-counter and used them as collateral for loans from cryptocurrency lending firms, supported by historical on-chain data showing substantial inflows and outflows between FTX, Alameda, and Genesis Trading wallets, with transfer volumes reaching $1.7 billion in December 2021.
The collapse of the Terra ecosystem and the subsequent bankruptcy of Three Arrows Capital (3AC) seemingly led to liquidity problems for Alameda due to the drop in FTT’s value. This resulted in a concealed $4 billion FTT-backed loan from FTX.
Nansen’s on-chain data aligns with this theory, showing that around June 2022, Alameda sent approximately 163 million FTT tokens to FTX wallets, valued at roughly $4 billion at the time—a figure consistent with statements made by Bankman-Fried’s associates in an interview with Reuters.
Lastly, blockchain data indicates that Alameda was unable to fulfill an offer to purchase FTT tokens from Binance at $22 on November 6, following negative reports about Alameda’s financial health, as announced by Binance CEO Changpeng Zhao.
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