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 🧵👇 Image
2/ That day, September 28, over 8.6 Billion USD worth of FTT was moved on-chain.

That was by far the largest daily move of FTT in the token's existence and one of the largest ERC20 daily moves we ever recorded at Coin Metrics. Image
3/ I went through all transfers that happened that day using CM ATLAS and ranked them.

I found a peculiar transaction that interacted with a contract from the FTT ICO.

This 2019 contract *automatically* released 173 Million FTT from the token's ICO.

etherscan.io/tx/0x975d62232… Image
4/ The recipient of the $4.19 B USD worth of FTT tokens was no one but Alameda Research!

So what? Alameda and FTX were intrinsically connected from day 1 and Alameda obviously participated in the FTX ICO.

But what happened next was interesting...
5/ Alameda then sent that *entire* balance to the address of the deployer (creator) of the FTT ERC20, which is controlled by someone at FTX.

In other words, Alameda auto-vested $4.19 billion dollars worth of FTT just to send it immediately back to FTX.

etherscan.io/tx/0x8c7cf8d16…
5/ Here's what I think happened:

- Alameda blew up in Q2 along with 3AC+ others.
- It ONLY survived because it was able to secure funding from FTX using as "collateral" the 172M FTT that was guaranteed to vest 4 months later.

Once vested, all tokens were sent back as repayment.
6/ Remember, the FTT ICO contract vests automatically.

Had FTX let Alameda implode in May, their collapse would have ensured the subsequent liquidation of all FTT tokens vested in September.

It would have been terrible for FTX, so they had to find a way to avoid this scenario.
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.

cryptobriefing.com/voyager-tumble…
8/ The Alameda bailout likely put a dent on FTXs balance sheet to the point where it was no longer solvent.

This would have been fine if the price of FTT didn't collapse and a bank run ensued

This is why Alameda tried their best to protect FTT's price.

cointelegraph.com/news/binance-c…
9/ Here's where I think it gets crazier.

There is a chance the folks from Binance knew about this arrangement between FTX and Alameda.

An opportunity emerged.

As large holders of FTT, they could start deliberately tanking that market to force FTX to face a liquidity crunch.
10/ Long and behold, Binance comes to FTX's rescue.

Did CZ just walk out with one of his largest competitors at the expense of a relatively large FTT bag he was going to unwind anyways?

Huge if true™️
11/ Important to note that this is my own personal highly-speculative take on what happened based on these on-chain artifacts.

A lot more is likely going to come out in the following days.
12/ Evidence that supports this hypothesis keeps coming out.

FTX-US President Brett Harrison stepped down a day before Sept 28. transfer.

Maybe he wasn't on-board with a transaction that looked like outright fraud?

coindesk.com/business/2022/…
13/ Voyager had 4,650,000 FTT and 63,750,000 SRM (Serum) tokens.

Just like Alameda, SBF might have had no other option but to bail them out.

fortune.com/crypto/2022/09…
14/ SBF tried to contain any FUD saying the transfer was "rotating" a few wallets and that they do this "periodically"

Both are lies: the FTT transfer was between 2 entities, not "rotation"

I wouldnt call the largest FTT transfer ever "periodical"

15/ Reuters internal FTX source:

"Seeking to prop up Alameda, which held almost $15 billion in assets, Bankman-Fried transferred at least $4 billion in FTX funds, secured by assets including FTT and shares in trading platform Robinhood Markets Inc,"

reuters.com/technology/exc…

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More from @LucasNuzzi

Nov 22, 2022
1/ Over the past few weeks, my team at @coinmetrics has been obsessed with answering one question:

How did Alameda manage to lose billions of dollars of FTX user funds?

I think we've found some answers 👇🧵 Image
2/ First, let's get something straight:

The line between Alameda and FTX was immensely blurred from the very beginning.

Our analysis showed thousands of large transactions from FTX to Alameda, so user funds were likely siphoned over the course of many months.
3/ The chart below shows the amount of ETH sent by Alameda in USD terms and the various applications they used.

It's truly astonishing: Alameda was involved in everything from DeFi borrowing and lending to cross-chain bridges across many different ecosystems. Image
Read 16 tweets
Nov 13, 2022
1/ FTX might have minted Serum (SRM) off thin air to prop up its balance sheet:

Serum's total supply increased by 60% this year via 2 huge mints. These were not previously disclosed based on anything I could find.

1st mint: Feb 19, 50M SRM
2nd mint: May 25, 50M SRM
2/ Earlier today, it was reported that FTX valued its SRM position at $2.2bn USD: the largest position on its balance sheet.

Serum's market cap is less than $88mn, so they likely valued their holdings using a much higher price for SRM, which is probably illegal.
3/ A key question is how did FTX get this many SRMs?

These 2 mints might be how. 60% of new tokens to prop its balance sheet when FTX needed it the most.

Feb 19: Crypto crashes 50% from ATH
etherscan.io/tx/0xb732cd3d5…

May 25: Crypto funds blew up (Alameda)
etherscan.io/tx/0x21ce9356c…
Read 7 tweets
Nov 10, 2022
Here's how you know FTX is done. Let's read between the lines.

Why would they have to "swap" these tokens instead of withdrawing them? Simple: FTX is no longer in possession of them.

This is not a "credit facility". It's not an "injection" of liquidity. Allow me to explain 👇
The loan that FTX made to save Alameda was likely in crypto.

They lent out their customer's crypto and that's why they weren't able to meet all of their withdraws, a large chunk of their balance sheet went to Alameda.

Today, 2 FTX whistleblowers confirmed it on Reuters: Image
Alameda either used that crypto to repay its short-term liabilities OR used it as collateral for another loan.

Therefore, SOMEONE ELSE is in possession of these TRX, BTT, JST.. and other tokens.

If those were used as collateral for another loan, that someone else is screwed.
Read 6 tweets
Aug 11, 2022
Yes, the "Mock" Merge last night was eventually a success... but we did see some hiccups that might impact users when the real Merge takes place.

We've been working on it for nearly a year at @coinmetrics and thought I'd share some notes 👇
Nearly all clients (nodes) struggled to determine what was the final block of the PoW chain last night.

That's because of the high rate of reorgs (changes in block ordering) witnessed in Goerli/Prater.
Multiple validators had to restart their nodes which led to a decrease in the number of peers/validators online.

Our primary node pair at @coinmetrics (Lighthouse + Geth) strangely saw the transition to PoS twice at slots 3639527 and 3639557 (roughly 5 minutes apart).
Read 6 tweets
Jun 15, 2022
22Q2 is the first time in the history of stablecoins where Total Supply decreased.

Even if we exclude UST, over 10B has been redeemed *directly from the treasuries* of major issuers

Some @coinmetrics data 👇 Image
Tether has seen the most redemptions out of all centralized issuers, with a decrease of ~7B in total supply (on ERC, OMNI and TRX).

The sharpness of that decrease suggests that a single entity, or small cohort, was behind it. Image
Nearly 40% of MakerDAO's DAI was retired as a result of liquidations, the largest liquidation event of its history. Image
Read 4 tweets
Jun 14, 2022
Celsius calls itself a "network" or a "lender"

But in reality, they operate more like a highly-leveraged hedge fund.

Their business model consists of deploying user deposits across DeFi protocols with the goal of maximizing yield.

1\ A thread on what went wrong 🧵
2\ Fundamentally, when the ultimate goal of your product is to maximize yield, you need to have a solid risk framework.

You need to be able to determine when a risk is not worth the marginal yield, especially when user funds are at stake.

Pretty reasonable, right?
3\ Except that Celsius does not seem to have such a framework, at least not publically available.

What we've seen instead over the past year is an increased appetite for risk and willingness to deploy millions in highly experimental DeFi protocols.
Read 14 tweets

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