Thread by @MessariCrypto

1/ DeFi can't solve the issue of basic record keeping and general accounting if institutional crypto continues operating off-chain.

Let's explore the opaque centralized finance (CeFi) practices @FTX_Official group used to get ahead.🧵

2/ @FTX_Official and #Alameda’s operations consisted of a few key, related areas:

+Market making
+Exchange operation
+Liquidation protection
+Venture funding
+OTC trading and lending

3/ Crypto hedge fund #Alameda was best known for its trading strategies and arbitrage expertise, both key to its work as a market maker.

As the space became more crowded, less profit was available for each player.

Enter a brand new exchange in @FTX_Official.

4/ #Alameda was one of the first market makers on @FTX_Official, acting as the "backstop liquidity provider" for FTX's liquidation engine.

While the relationship provided lower risk and tighter spreads fueling growth, the financial success of these entities became intertwined.

5/ This relationship continued into project funding as both entities used their venture arms to invest in tokens with "predatory tokenomics".

As investor uncertainty crept in, the price of $FTT and "Sam Coins" tumbled sparking cascading liquidations for #Alameda.

6/ While #Alameda was protected from bets made on @FTX_Official, it did not receive the same protection on over-the-counter (OTC) deals.

So where did the money come from, and where did it go?

Find out in the full report from @sunnydece.
messari.io/report/the-rip…

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