Blockchain analysts at Nansen have delved into the days leading up to FTX’s downfall, shedding light on the transfer of $4.1 billion in FTT tokens between Alameda Research and the troubled exchange. Amid the legal challenges faced by Sam Bankman-Fried, former FTX CEO.
FTX’s collapse, attributed to the revelation of Alameda holding a substantial 40% share of its $14.6 billion assets in FTT tokens in September 2022, prompted Nansen analysts to detect questionable on-chain activities preceding the public disclosure. Between September 28 and November 1, Alameda sent $4.1 billion worth of FTT tokens to FTX, coupled with continuous transfers of USD-pegged stablecoins amounting to $388 million.
On-chain data further disclosed that FTX held 80% (280 million FTT tokens) of the total 350 million FTT supply. Nansen’s insights showcased substantial FTT trading volume, reaching billions of dollars, flowing between diverse FTX and Alameda wallets.
Highlighting that the majority of the FTT token supply was locked in a three-year vesting contract, with the sole beneficiary being an Alameda-controlled wallet, Nansen suggested that the two companies, controlling 90% of the FTT token supply, might have mutually supported their balance sheets.
The report proposed that Alameda likely engaged in over-the-counter sales of FTT tokens, possibly using them as collateral for loans from cryptocurrency lending firms. Historical on-chain data indicated significant inflows and outflows between FTX, Alameda, and Genesis Trading wallets, with transfer volumes reaching up to $1.7 billion in December 2021.
The collapse of the Terra ecosystem and the subsequent bankruptcy of Three Arrows Capital (3AC) potentially triggered liquidity problems for Alameda due to the devaluation of FTT. This situation prompted a clandestine $4 billion FTT-backed loan from FTX to alleviate the financial strain.
The researchers pointed out that the $4 billion transaction coincided with the loan figure mentioned by close associates of Bankman-Fried in an interview with Reuters. Blockchain data also suggested that Alameda may have struggled to fulfill an offer to purchase FTT tokens from Binance at $22 on November 6, following negative reports about Alameda’s financial health prompted Binance to offload its tokens.